Sept. 20 (Bloomberg) -- Patricia: Mel and I gave the store and the catalog everything we had, all day, every day of the week. It would have been unthinkable for either of us to let the other down.
Nonetheless, I was beginning to crumble. Not enough sleep. Eating on the run. Too much coffee. I was getting cranky, snapping at Mel. He was snapping back. Our fights could be loud and fierce, although they usually evaporated quickly, leaving both of us a bit embarrassed. Ultimately, we agreed on the big issues, until ...
One night, driving home after a final post-midnight press check at the printer’s on yet another catalog, I was startled by the blast of a truck horn. I had been drifting into the oncoming traffic on the Golden Gate Bridge, falling asleep at the wheel. Were it not for the horn, I might have had a head-on collision.
“We have to stop the catalog,” I told Mel firmly at breakfast the following morning.
He shook his head. “We can’t go backward,” he said.
“Well, we can’t stay where we are,” I insisted. “I’m at my limit.”
“I know,” he said. “Our problem is that we’re going in circles. We need to bust out, make a go for it.”
“Bust out?" I asked. "How?”
His response: “Open another store.”
“You’re not hearing me!” I got up to leave, furious. Mel came after me.
“I do hear you,” he said. “We need to scale up so we can get the help we need to make all this work.”
He insisted I take a few days off. It turned out all I needed was one day, a brilliantly blue Marin County, California, day. I took a head-clearing, spirit-lifting hike to the top of Mount Tamalpais, and sat there for a while by myself.
Mel was right. We couldn’t go backward. We had to leap. There was no other way out of our problem. I went back to work.
Mel: When Patricia said we had to shut down the catalog, I knew that what she meant was that things had to change. We were reaching a place where what had worked for us in getting into business was now beginning to work against us. As much as we loved the idea of being professional amateurs, it was wearing us ragged.
We needed better employees who had experience in mail order and retail. But smart and talented people did not work at the wages we could pay.
Closing the catalog was unthinkable. The store brought us to Mill Valley, but the catalog took us to the world. And the catalog was our surest moneymaker.
Here was my plan: create the best catalog yet, add another color, and quintuple the quantity we mailed to nearly a million. I’d been testing lists in smaller mailings, and I knew which ones could yield the best results. Assuming that the response held close to what we had been getting on the smaller test mailings -- now 6 percent, more than three times the average in the catalog business -- we would generate enough cash to open a second store. The second store, as a third profit center, would justify the cost of a warehouse and the extra level of management.
Our only out-of-pocket expense would be the extra postage. The list-rental agencies, the printer and the suppliers were by now all agreeable to “terms.” Only the U.S. post office required cash on the spot.
The plan worked. In less than two months, we generated the money necessary to open a second store in San Francisco.
Patricia: We pinpointed the San Francisco ZIP codes with the highest response to our catalog -- Russian Hill and Pacific Heights. A commercial section of Polk Street sat in a valley between them, and the rents there were reasonable. Serendipitously, a storefront opened on one of the best possible blocks. It was in a small building: 1,200 square feet of retail space on the ground floor with a rented apartment upstairs. We painted bold, black zebra stripes over both stories. Passers-by could not ignore it.
In the large windows on either side of the entrance, I reproduced a scene like the ones I’d been drawing for the catalog covers: an old typewriter, binoculars and a few books on Africa cluttering a weathered roll-top desk, with a safari jacket hung over the back of the chair.
Inside, we had palm trees made of chicken wire and fabric, papier-mache parrots and a camouflage net, hung from the ceiling and filled with palm fronds and leaves to simulate a forest canopy. On the floor, we painted a resin-coated creek, and built a bridge over it to an Astroturf meadow in the back of the store with leopard print dressing rooms.
A smiling young woman, sparkling with charm, walked in the door.
“Are you looking for help?” she asked.
“Well, actually,” I answered, looking her over, “we’ve been looking for someone just like you.” Randi Hoffman turned out to be the best salesperson, then manager, we ever found.
The city store was bigger, lighter and, from Day One, way more profitable. We supplemented the surplus with some new merchandise found at trade shows that fit the concept: tropical-weight wool trousers, cotton safari jackets, T-shirts and fatigue pants, all new and in a full range of sizes. As Mel had also planned, the new money went into the new catalog, and this one was better than we hoped for. Sales were now booming, and we finally began to hire more experienced employees.
Solving one problem, however, created another: We had picked the domestic-surplus stockpiles clean. Although we filled some gaps with the new merchandise, the company’s was built on exotic surplus, and our survival depended on the generous margins the surplus allowed. We had a roaring business ... with a dwindling supply. Fortunately, Mel was already on it.
(Mel Ziegler and Patricia Ziegler are the founders of Banana Republic and the Republic of Tea. This is the second in a series of three excerpts from their new book, “Wild Company: The Untold Story of Banana Republic,” which will be published Oct. 2 by Simon & Schuster. The opinions expressed are their own. Read Part 1 and Part 3.)
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