Exceptions To The Rule

Why some INC. 500 companies are growing in industries that aren't.

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Retailing went into a nose dive in 1980 and hasn't pulled out yet. Corrected for inflation, dollar volume in the retail industry this year will probably fall 3.5% from its 1979 peak. Some of the giants are already in trouble -- F.W. Woolworth Co.'s Woolco, for example, or KDT Industries Inc.'s King's Department Stores. But if a retailer is small and maneuverable, it still may soar.

The 42 high-flying retailers on this year's INC. Private 500 use various stunts. One of them, mail order, lets a seller direct his efforts to people most likely to buy.

Early Winters Ltd. (#96), based in Seattle, operates two small flagship stores, but about 94% of its sales come from the catalogs it mails to a targeted market of outdoor enthusiasts. They buy jackets made of bunting, T-shirts of Shanghai silk, and brass candle lanterns -- as well as such prosaic items as tents, parkas, and sleeping bags. For most products in its catalog, Early Winters is the sole source, according to Bill Nicolai, company president.

Jerry Greenberg, of Finals Racing Swimsuits Ltd. (#55), also targets his selling to a willing market, but he sells on price. Greenberg figured he could make and sell through a catalog a racing swimsuit that would beat out the then top-selling Speedo brand. His company has captured close to 65% of the competitive swimsuit market in six years with a mail-order suit that costs about half the store price of a Speedo suit. Finals projects a serious image. "People in our catalogs have never smiled," Greenberg says.

Greenberg's company grows by selling to people who know exactly what they want. On the other hand, Joe Armentrout, of Crazy Joe's Inc. (#365), headquartered in Kaunapolis, N.C., concentrates on those who don't, which is most of us.

Auto parts stores intimidate the average mechanical illiterate. The counter clerks call all the blue-jeaned, T-shirted customers by their first names, and you don't even know the name of what you're there to buy, much less whether it's the "hemi" or OHC version. Welcome to Crazy Joe's. Three company-owned and two franchised Crazy Joe's are laid out like supermarkets. Telephones on the shelves and clerks roaming the aisles help customers find what they need more easily.

Joe Armentrout, the 38-year-old president, has finessed the competition by carefully courting the do-it-yourselfer. Stores are open from 8 a.m. to midnight; after 9 p.m. a single employee dispenses parts from a drive-in window. Each store keeps a library of repair manuals, a tool-rental service, and videotape lessons on such subjects as changing headlights and adjusting emission controls. Furthermore, half the staff is female. "We're able to attract many lady do-it-yourselfers for the first time," says Armentrout, who also owns a string of muffler shops and a warehouse operation.

When Israeli-born Rivka Seltzer founded Aloe Charm Inc. (#284) in 1975, she chose to sell her skin-care products and cosmetics through the party plan, another way to target selling efforts to a willing market. Friends of company-trained cosmetic "consultants" host home gatherings where skin-care and makeup tips are dispensed and orders are placed. The consultant pockets a minimum 25% commission on sales, which average $200 per party "the highest in the industry," claims Seltzer. The number of consultants has grown from 6 to more than 8,000 in 33 states, partly, says Seltzer, because Aloe Charm handles all shipments and billing and requires nothing more than a $15 registration fee for its salespeople.

Throwing a party is about the only thing Dan Fattaleh hasn't done to sell his stained-glass supplies -- 300 types of stained glass, as well as tools, books, and patterns. Fattaleh's company, Delphi Glass Corp. (#78), sells through five retail stores, a franchise operation, and a mail-order catalog. It wholesales to studios and hobby stores.

Fattaleh carved out his niche in 1972 when, as an instructor in stained-glass creation, he couldn't get supplies. He has tried to fill that market. He has also tried to make it grow by starting people in stained glass as a hobby. This year, about 1,500 people will attend classes in Delphi Stained Glass Centers. And Fatteleh helps instructors start classes in community colleges and adult education programs around the country. "After someone takes a class, he's hooked," Fatteleh says.

A company can keep its feet dry just by having the right product in the right place. Three of the four furniture dealers on this year's INC. Private 500 sell waterbeds in the West and Southwest.