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It’s Not Where You Are but Who You Are

As the economy sputters, new opportunities open for small retailers in big malls

by Ann Morrow on March 29, 2012

On a recent afternoon at Jay St. Video Games, owner Ryan Hughes was having an in-depth conversation with a customer about the spiking resale value of Pokemon Yellow. It’s this commitment to taking the time and sharing the expertise that’s made Jay St. a favorite with gamers far and wide. But if you had assumed that this fan-intensive interaction was occurring in a little shop on Jay Street in Schenectady, you’d be wrong—but not by much. Jay St. Video started on Jay Street as a typical, two-man start-up but moved to Colonie Center a couple of years ago. The store was so successful—$500,000 in business the first year—that the owners opened a second branch in Crossgates Mall in Guilderland, and then another in an even larger retail behemoth, King of Prussia Mall in Pennsylvania. “Our attitude was ‘go big or go home,’” says Hughes.

This unusual expansion plan had a few things going for it, namely (but not exclusively) a recession that accelerated the growing demand for second-hand games. “People love entertainment, and in a down economy they won’t pay for new games,” says Hughes. “They’ll pay $50 for a used game that will keep them busy for a week or two.” The inventory at Jay St. goes all the way back to the Atari era, yet the recent appreciation for vintage games, such as arcade-style games, wasn’t a primary reason for the stores, either. According to Hughes, the owners simply wanted to cater to every kind of gamer by providing every kind of game there is. “If it’s a video game, we sell it and we buy it,” says Hughes. “We have retro, we have new. We deal in things that are not readily available in the box stores.” And if it’s a new, famous-name game? “Then we undercut the hell out of the box stores,” he adds with a trace of glee.

Jay St. has kept some of its business practices from its original store, such as a variety of discounts and trade values up to 40 percent, and has expanded its roster of knowledgeable personnel. “Our staff is a bunch of seasoned video gamers,” Hughes says. “These guys play every day, they play every genre, and they can make recommendations on the fly. We have guys who love Wii, who love Sony, we have a guy who specializes in shooter games. We cover all borders, especially our retro games,” Hughes explains.

Though Hughes and his partner, Jon Stark, were veteran gamers before opening their stores (they’re both barely 30), Hughes says that he wasn’t a collector, and that what he most enjoyed was how games brought people together. “I liked seeing how people would sit together in a room for hours and hours, playing together, or battling each other,” he recalls.

The partners’ real foundation for success, he says, is the experience they had as business consultants and all the stores they opened and managed in that capacity. Their decision to move to malls, he says, was based on looking at what kind of a business they had, and who their clientele was, and determining that high rents can mean high traffic and high yield. “You can go to a cheaper, more secluded location,” he adds, “but then you have advertising costs.”

Still, the partners were careful in negotiating their rents. “We’ve been doing this for a long time,” he says, implying that operating in a mega-mall is not for amateurs. “I’ve seen a lot of stores open and close, stores like this one,” he continues. “Just because you have a passion for something doesn’t mean that you’re equipped to make a business out of it.”

Maybe not, but a passion for your product certainly helps. An example of this philosophy can be found at For the Love of Wine at Crossgates. Husband and wife owners Allan Von Schenkel and Kristen Williams are classical musicians (aka Basso Moderno duo) and sommeliers who bought a house in the Helderbergs five years ago and then decided to open the kind of boutique wine shop they had become accustomed to in New York City, “because there weren’t any here,” says Von Schenkel. They wanted a mall location, he says, because it’s like being in a city, where their shop would be surrounded by other retailers. Another reason, he says, is that they didn’t want to have to carry everything, like a corner liquor store, but would able to be selective about quality and variety.

The couple also found the recession to be a boost. After big stores like Jordan Marsh and Borders vacated, he says, rents became more reasonable. “The business model of malls has changed,” he says. “Crossgates wanted us here, because we are a unique type of shop.” He adds, “And being in a mall has allowed us to become a destination.”

That wine stores are not yet common in malls has been another advantage, he says, as FLOW gets a lot of walk-in traffic just out of curiosity. The downside to being in a mall, he says, is people’s lack of education about wine, which he finds to be an American problem in general. “That’s why we have wine classes,” he says. “So people will be more open to quality wines.”

So maybe the old business adage of location, location, location might be amended to luck, expertise, and more luck.