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STRATEGY

Ricky's Subversive Business Model
 

When Halloween rolls around, Ricky's is the place to be. Here's how the beauty supply chain competes with larger retailers.

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In New York City, only one retail chain is synonymous with Halloween, and that's Ricky's. Come October, the stores best known for their colossal selection of beauty products, transform into a wonderland of stacked heels, glitter, fake eyelashes, and fun.

So how has a regional, family-owned brand with 28 bricks-and-mortar stores continued to grow as other retailers struggle to compete e-commerce giants like Amazon? By focusing on products outside of the mainstream, carefully monitoring inventory, and expanding into new services that match its trademark style.

The Success of the Subversive

Stepping in to Ricky’s is a lot like entering a club--that is, if Katy Perry happened to own it. Near a wall of  candy-colored wigs is the chain's glittering logo: a toothpaste-like tube dispensing the motto, “Looking good, feeling good!” Ricky Kenig, the son of a pharmacist owner, opened the chain in 1989. Kenig sought to build on his father's business strategy of selling everyday basics, like mouthwash, along with pharmaceuticals. But what made Ricky's a destination was Kenig's creative zeal--and his penchant for catering to New York's drag queens, downtown girls, makeup artists, and designers.

“I’m not a corporate guy,” he told The New York Times last year. “I wouldn’t want to take a corporate guy backstage at a fashion show. They’ll be handing out business cards left and right. The makeup artists, they’re really artists.”

But Ricky's doesn't just cater to artists. “The truth is, the Ricky’s customer could be anybody," says company president Richard Parrott. "If you're headed to Lousiana for Mardi Gras, we have a section. If you're going on vacation, we have Havaianas. There are different elements of the business that won't allow us to pinpoint a single person.” 

But there is a logic to selling flip-flops with candy and lip gloss. “The first things we ask when evaluating products, is whether it’s exclusive, in the mainstream, and commercial,” says Parrott. If it's mainstream, it isn't for Ricky's--Ricky's prides itself on being subversive, and first. Back in the 1990s, the retail chain gave technicolor Manic Panic hair dyes their own store-within-a-store. Ricky's also helped ethnic hair care brands like Miss Jessie's get off the ground with attractive in-store displays.  

Reevaluating Inventory

Though the store declined to give revenue numbers, it's clear that business is booming. On average, Ricky’s deals with some 700 vendors and adds new product lines at least twice a week. "We call ourselves the ultimate incubator," says Parrott. The company contantly assesses its product categories, which range from wigs to hair dryers to Ricky's own line of cosmetics. “We ask what sections are working that we’d like to expand,” says Parrott. “Several times a week we’ll plan on exiting products that just aren’t working.”

Nearly every product Ricky's stocks carries some sort of value, be it an eye-catching package or bargain price. “Whether it’s novelties, parkas, home goods, we want someone to pick up an item and say, ‘Oh wow, that’s only $10,’” Parrott says. “We’re trying sell things we can see people using. We don’t want them to feel like they’re wasting money.”

Expanding the Brand

Lately, Ricky's has focused on broadening its reach--there are stores in Hoboken, New Jersey, and Miami Beach, Florida--and finding ways to increase its foot traffic in New York City, especially in touristy spots like Midtown. 

The company also launched a costume concierge program with packages ranging from $25 to $1,000 for Halloween shoppers, which offers consulting and in-house styling. The chain has also opened several Ricky's hairsalons, which offer the company's trademark style of downtown cool.

“Anybody can go to Amazon and buy anything now,” as Kenig told The Times. “But we’re about the experience." 

IMAGE: Courtesy Ricky's
Last updated: Oct 25, 2013

JILL KRASNY is the associate editor for Inc. Previously, she was editor at Business Insider and has held positions at TheStreet and Reader's Digest. Krasny is a graduate of the University of Southern California, holding a degree in communication.
@jillkrasny




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