The Years of Living Dangerously

Niches, Service

Bill Divine, the partner from Appleton, thinks Doug Meredith is a crack retailer. "He knows the front end of these stores better than anybody I've ever seen." Divine says Meredith rarely gets stuck with inventory that will not move. He knows his audience.

Perhaps that's because Meredith is a bulldog, never one to sit back and let things just be. He remodels one of his stores every year. He has to keep things looking fresh. In the midst of such an effort, his workweek lengthens from 65 hours to 80. He and Pat are believers in the faith of hard work. For them, the ability to outwork the competition provides a necessary edge. Bay Pharmacies has 24-hour emergency service every day of the year. It delivers prescriptions; Wal-Mart will not.

Still, people now and then will walk into the store, ask the pharmacist for the recommended medication for a sick child. Then they'll turn and walk out just as quickly, saying they'll buy it at Wal-Mart, where it's a few pennies cheaper. To that, Meredith will simply shake his head and say sadly: "People are crazy.

"Wal-Mart has done a great PR job with old Sam Walton in his pickup truck," he continues. Meredith asserts that it's a myth that Wal-Mart's prices, on average, are lower than his.

Meredith's style has always been not to get mad but to get even. He spends much of his day on the retail floor or shuttling inventory between his two stores in an aging van. He built a crafts counter in his east-side store that's always supervised by an employee who knows the merchandise--a familiar face that customers can recognize. He built the aisles at an angle so that shoppers could glimpse all the merchandise at once, not just the hyped goods at the end. If customers are left waiting at the pharmacy, Meredith gives them "Baybucks," a coupon that entitles them to a discount on their next prescription.

Meredith intends to survive by hammering service. He will wade into the labor-intensive niches where the big discounters would never go. A glance around his west-side store offers evidence of the lucrative, yet sobering future to which Meredith seeks to lay claim. "The prostheses are for mastectomies and the turbans for cancer," says Meredith, motioning toward a display case filled with merchandise.

Behind that, there's a newly built section of the store devoted to the maintenance, repair, and customization of wheelchairs. In the era of managed care, as more insurance companies and hospitals edge more people out the door faster, serving the home health-care market has turned into a growth business for Meredith. Though it currently accounts for 7% of his volume, it is growing by 15% a year and affords 50% gross margins. Meredith will attack it.

End Game

Doug Meredith is 58, and one day soon he'd like to retire. But his retirement money is locked up in the equity he holds in the business. Asked what the future will bring, Meredith again eases the door shut. He says he feels a responsibility to employees, but ...

Could he sell the business to them? "That doesn't work. And besides, they couldn't afford it." His current inventory is worth more than 20 times what he and his partner originally paid for the entire business. It stuns him to think that at one time he and his partner bought a business for so little, and it depresses him to think that he could never do the same today. His best hope, in fact, is that a large chain, the sort he's been warring against, comes along and makes him an offer.

"It's tougher all the time," says Meredith. People look at his sales and figure he's in clover. They don't look at that shrinking net margin of 3% that has to be divided among three partners and gets further eroded by the need to carry an incrementally larger inventory each year. And besides, there are other things that have nothing to do with money that Meredith must one day see to. "I would like to counsel teenagers," he says. He'd like to help them through the pressures of modern life. And then he hopes there will still be time to seek solace by the lake in the woods--which for now is little more than a three-by-five snapshot on his office wall.

Coda: The Primacy of Soul

It's strange in the practice of journalism how infrequently the questioner becomes the questioned. Reporters' subjects often show little curiosity about journalists' lives or what they think. They tend to be wrapped up in the arduous yet exciting work of growing a business. But Doug and Pat Meredith were different. They seemed especially attuned to the world beyond Sturgeon Bay.

Sitting down at lunch one day with me, they wanted to know what impressions I had formed in my travels around the country. I thought a moment and then replied that what we call the new economy--what in fact passes for modern-day capitalism--had perhaps grown too efficient, too successful in meeting our everyday needs. I said that there were too many stores in America, too many choices beguiling the consumer, and that the economy was now built on too much debt. Doug and Pat quietly nodded in agreement.

But if I were asked the question again, I might answer differently. I would say that I'm stunned by how much small-business owners like Doug Meredith work and how little they complain. I would say that the "new economy," when viewed from up close, appears in some ways not new at all. It is harder, yes, because nothing ever stays the same now, and the lulls that in the past allowed for complacency or a mistake have disappeared. But owning a small business has never been easy. I would say, too, how remarkable it is that despite years of betrayal and adversity the Merediths exhibit no rancor. There is instead a serenity, a bone-deep sureness about what has been accomplished. The Merediths have built a good business and in so doing have built a good life.

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