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Talk Story

BY JOHN FLANAGAN


New strategies could help
isle businesses succeed


WILLIE Keeler's strategy for success was "Hit 'em where they ain't." In a world of carbon-copy companies, that's good advice. Wee Willie only hit a career total of 34 home runs, but during nine years with the Orioles and Dodgers, he hit .378.

Nine years is a lifetime in business today, where you must heed Keeler's other bit of advice: "Keep your eye on the ball." That's especially important in Hawaii, recently deemed one of the worst places to do business in America by Forbes magazine.

One new enterprise targets high-end consumers by acquiring several well-liked but struggling brands, consolidating their operations and concentrating on improved customer service.

That's what little Right Start, Inc. of California did. The baby-products catalog retailer acquired FAO Schwartz and Zany Brainy toy stores -- but only the profitable ones -- and added Right Start boutiques.

The new children's specialty company, renamed FAO Inc., provides well-heeled patrons an alternative to Wal-Mart, Toys "R" Us, Target and Kmart. Besides adding car seats and strollers to the product line and expanding book and video departments, FAO pampers customers with free gift wrapping, Disneyland-like life-size toy characters walking the aisles, extra-knowledgeable sales people and personal shoppers.

SUCH PERKS cost money. To afford them FAO charges more, but it's also saving millions by combining operations like warehousing, distribution and accounting. In 2002, according to the Wall Street Journal, FAO will pay $23 million in administrative costs, compared to the $40 million its separate entities spent in 2000.

FAO predicts earnings this year of between $21 and $25 million on revenues exceeding $560 million. Meanwhile, competitors such as Wal-Mart and Target are complaining about lackluster sales and watching their stock prices slide.

Rather than pamper customers, many established retailers are going the other way, blaming it on the tight economy.

For example, stores like Saks Fifth Avenue, The Gap and Target are revising returns policies. Saks still lets you return anything, anywhere, anytime, but you'd better bring a receipt with you. The Gap also had an anything, anytime exchange policy, but items returned after two weeks must now be unworn, unwashed and with all the tags still attached. Target only allows exchanges within the same department.

This new stinginess offers opportunities for companies willing to sell service and quality at a premium. For example, Nordstrom -- which once accepted a set of returned snow tires, even though it doesn't sell tires -- hasn't jumped on the tougher return policy bandwagon.

SUCCESS requires differentiating your products from the competition's. That's the challenge facing the golf industry, which added 1,400 new courses during the last three years while rounds played have stayed about the same.

Two strategies have emerged. One is to make courses easier, faster and more enjoyable. The other: Pamper customers and charge accordingly.

South Carolina's Turtle Point eliminated many bunkers and made greens bigger to speed play, while the Broadmoor Golf Club in Colorado Springs cut the rough shorter, moved bathrooms closer to cart paths and squeezed in an extra 1,000 rounds, the Journal reports.

Other courses, like Kaneohe's Koolau Golf Club, have installed GPS units in golf carts that offer tips, show precise distances to greens and hazards and market the snack bar's hotdogs and beer. At the Bear's Best in Las Vegas a forecaddie finds your ball, brings you a drink, offers sweatshirts for sale and cleans your clubs, but you'll pay $235 a round, plus tips.

Feeling too pampered? "Walking only" courses are a new market niche and many clubs now will let you walk and carry you own bag -- for a fee.

Hit 'em where they ain't, Hawaii.





John Flanagan is the Star-Bulletin's contributing editor.
He can be reached at: jflanagan@starbulletin.com
.



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