Scaring Up an Edge in the Retail Game

Come Halloween, Ricky's bath-and-cosmetics stores draw naughty trick-or-treaters. As a brand-builder, it's a formula that sizzles

By Burt Helm

All Gene Lantsman wants right now is a size 23 dress and a pair of size 14 heels. The 43 year-old Manhattan resident is planning to be Dame Edna Everage, the Australian drag queen comedian, for Halloween. He's searched high and low, and is confident that Ricky's Urban Groove will finally have what he needs. "I looked everywhere on eBay (EBAY ) and the Internet," he says, "and I couldn't find anything."

In the run-up to Fright Night in New York City, Ricky's Urban Groove stores (also known as Ricky's NYC, or just plain Ricky's) brace for the mobs -- mobs so big that bouncers are added to the payroll. "It's like a club" says Will Larkin, manager of a new store in Manhattan's East Village. At one Midtown location last year, there was a line that wrapped all the way around the block. But the day of Halloween, he says, is the craziest. Then the mostly-female clientele come in already "tipsy" to find a last-minute costume before heading off to a party. "We had girls dancing together naked with the [changing room] door open," Larkin says. "It was insane."

CLEAN FUN, MOSTLY.

  The man behind all this revelry? Ricky Kenig, married, father of three, a skinny, animated 42 year-old with peppered gray receding hair and a Vandyke beard. Spend some time with him, and it becomes clear where the booming 19-store chain gets its personality. He wears a small gold chain underneath a black T-shirt, which is imprinted in gold with an image of the Empire State Building, silhouettes of strippers, and a man in sunglasses sticking up his middle finger.

Imprinted beneath this pastiche are the words "Cash Money Ho's." When you get the voice mail on his mobile phone, it plays a part of a song by the rapper Snoop Dogg. He walks quickly and tensely, and when he talks, his eyes dart around impatiently. He's hyper, funny, and can't help but do several things at once. At Ricky's, he says, "We try everything. And if something happens and it's hot, we blow it up."

This is because Ricky's isn't primarily costumes. It's high-end bath and cosmetics stores. Halloween costumes, sexy or otherwise, make up roughly 10% of annual revenue. But the annual fright fest provides the stores with a powerful growth opportunity -- and a unique brand.

The edgy emporiums sell high-end shampoos alongside a vast variety of novelty sex toys, hundreds of wigs, outlandish makeup, and costumes. But Kenig & Co. have expansion plans, and are using the Halloween theme to launch two new stores in the New York area, building on the five they have opened since February. Bath and cosmetics products will be added later. While neither Dom nor Ricky were able to discuss specific numbers, reports in the New York press have said the chain should see $20 million to $25 million in sales this year, with projected revenues of $25 million to $30 million in 2005.

"WOW" FACTOR.

  Ricky's is also going national. This year it opened its first store in Miami's South Beach, and next year it has its sights set on San Francisco. Dominick Costello, vice-president of Ricky's and one of its controlling partners (the other major partners in the firm are Kenig's brother, Todd, who manages the finances, and another financial backer) says that they have also been approached by several venture-capital firms, large retail chains, and one "famous businessman" about the possibility of an acquisition.

"That's the ultimate goal, one day," says Costello, who adds: "Right now we're not ready for it, because we would undersell ourselves. We have to take the next six months to a year to get even stronger."

Despite the trendy industrial-steel flooring and pounding techno music, Ricky's have the cluttered look of dollar stores. Clear-plastic costume packages and wigs jam the walls from floor to ceiling. An adult-sized Harry Potter costume ($29.99) hangs on a shelf with El Bandido, a Zorro-style getup ($19.99). On shelves, among the costumes, are bars of Alba Pure vegetable-based glycerin soap, Dr. Bronner's Hemp Almond "Magic Soap," (each $4.99 a bar) and plain old Dove ($3.29 for a two-pack).

"WHAT PEOPLE WANT."

 "When you come in and see that it is almost packed to the gills, do you say, 'Ick, this is annoying?' Or do you say, 'Wow! I could find some really great stuff here!'" is how Costello describes the approach. The strategy is to sell as much of what's hot as possible, even if that means sacrificing the look of the stores and the consistency of their offerings.

During the summer, flip-flops dominated in the store. Kenig believes the cheap sandals do especially well in New York because buyers wear them around their apartment buildings.

"We just try to capitalize" on whatever people want, says Kenig. He likes to take that idea to the extreme. "I mean who the [expletive deleted] orders 250,000 flip flops?" Kenig spices his language up quite a bit.By Burt Helm

AN ARRESTING OFFICER?

  "It's an organized chaos," says Costello. "But we're definitely not a dollar store. I mean, God, we sell $80 bottles of shampoo."

Costello and Kenig admit the crowds sometimes frustrate customers during Halloween season, but they insist the critical mass of shopping humanity only adds to the fun and spontaneity, they hope. "Who wants to go to a drab drug store?" Costello says. "Ricky's is a show."

In a city where the odd and unusual are commonplace, luring customers can be notoriously tough. Ricky's tactic seems to be working. At the store on Fifth Avenue, Anatasha Paterson, Robin Asan, and Rob Friedman, who work for financial-services outfit Citco Group, came on their lunch break.

"This place gets crazy," says Friedman, who was there to get costume ideas. Asan picked up a scruffy black "Rapper Beard," which sells for $9.99. He says he plans to be Ali G, of the HBO comedy show with the same name. At the Fashion District store, Vanessa Kudic, a 22-year-old graduate student, weighed an Arabian Nights outfit against a low-cut cop uniform with shorts that lived up to their name. "I got my costume at Ricky's last year, and I knew I had get [the Arabian Nights costume], but now I can't decide."

And while some costumes show a lot of skin, others are simply vulgar. One $79.99 costume, for instance, lets the buyer become a giant foam penis.

INNOCENT HABIT.

  "We have a lot of things in our store that are just attention-getters." Costello says. "But if they don't sell, we do pull them." Kenig says the sex focus allows them to attract a young, hip clientele. But the owners also do it for their own entertainment. In the early 90s, "We were bored with just selling tooth paste" says Costello, "The sex stuff is way more exciting and cool to sell."

For the new Upper East Side children's store, Lil Ricky's, Kenig wants to add a Puberty Room, which would sell books on sex education and sexuality, and possibly condoms. Ricky's newest store, which will sell organic and natural bath and cosmetic products, will be called "Ricky's Natural with a Twist." A launch on New York's Mulberry Street is planned by the end of the year. "The 'twist' is the lingerie and dildos in the back," explains a bemused Kenig. "I mean, who would do that?"

It's irreverent, and at times off color, but Ricky's appears to walk just close enough to the edge without offending. Sister Maria, a nun (really, she was wearing her habit in the store) who teaches at a local Catholic preschool and kindergarten, was browsing on Oct. 21, drawn by the simple curiosity that attracts so many others. "We just saw the display yesterday, and thought it looked like fun," she says, while standing in front of a rack of "Sexy Trekkie" costumes, which include a button reading "Where No Man Has Gone Before." "It is," she says, "pretty nice in here." Naughty and nice.

Helm reports for BusinessWeek Online in New York.Edited by Rod Kurtz