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Upstarts: New-Biz Watch
 

A look at Mark Begelman's MARS, a music and recording superstore that encourages customers to touch the merchandise, plus four shorter articles about the retail trend called "entertailing."
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In two-part harmony: selling and jamming
Musical-instruments superstore mixes discount retailing with a medley of cutting-edge entertainment

Buy it, take it home, try it, and if you don't like it, return it to the store for credit--sorry, no refunds.

That's the message that a salesclerk at a musical-instruments store in Fort Lauderdale, Fla., conveyed to Mark Begelman a few years ago while he was shopping for a Marshall amplifier, the kind used by his favorite rock group, ZZ Top. Begelman had plugged a guitar into an amp and cranked up the volume. The salesclerk had shushed him, saying that he might disturb other customers. "I was totally miserable by the time I left," Begelman recalls.

But Begelman, a millionaire and the former president of Office Depot, didn't just get mad. In his own way, he got even. In December 1996 he founded MARS (Music and Recording Superstore). Now at his music-products stores--there are already 11, in six states--the instruments aren't locked up in a glass case, and customers aren't shushed. In fact, they're urged to jam to their hearts' content. ("We love it when you touch the stuff," say the MARS radio ads.) Each MARS outlet features a stage for impromptu performances, a fully functional recording studio, and music clinics on everything from drums to recording equipment.

What Begelman has built into his retailing strategy, borrowing heavily from the world of entertainment, reflects a national trend called "entertailing." It's conspicuous, among other places, at sporting-goods stores with indoor tracks for testing running shoes and at bookstores that offer free lectures and coffee. Merchants are re-inventing themselves as entertailers, says Roger Blackwell, a marketing professor at Ohio State University, because they face fiercer competition. "Everybody has good products at fair prices. So you need to give consumers another reason to come to your store," he says.

While Begelman may appear to be simply another rich guy indulging a whim, he's hardly a business ingenue. In 1986 he founded Office Club, an office-products chain, which rocketed to 57 stores before merging with industry giant Office Depot, five years later. Then, as Office Depot president for four years, he helped the company expand from 177 to 455 stores. Now Begelman, 51, is attempting to do for guitars and drums what he did for pens and paper clips. His MARS outlets are huge, averaging 35,000 square feet and crammed with 200,000 items. Begelman offers a lowest-price guarantee on all goods, which he sells for up to 60% off list price.

Among Begelman's 7,000 competitors in the $6.1-billion industry are two fast-growing Goliaths, whose strategies resemble his own: Guitar Center Inc., a publicly traded company based in Agoura Hills, Calif., that last year generated $297 million in revenues at 35 stores; and 20-store Sam Ash Music Corp., based in Hicksville, N.Y. Like MARS, Guitar Center and Sam Ash lure customers with entertailing splashes like in-house clinics and demonstrations and an open invitation to jammers. However, MARS achieves an almost Disneylike dimension that puts it in a class apart. Luminaries like Pat Travers and Butch Trucks of the Allman Brothers have rocked out on MARS stages. And Begelman boasts that he's the nation's largest private music educator by virtue of the 250,000 lessons that he expects to provide this year in his stores.

But MARS's razzle-dazzle is expensive. To open a store, it spends an estimated $1.2 million (not counting the outlays for inventory), 40% more than the $850,000 that an average Guitar Center outlet costs. MARS lost money last year, Begelman acknowledges, although he declines to say how much. His plans are nonetheless ambitious: he has raised $65 million from a private placement and out of his own pocket, and he envisions having 70 MARS outlets with revenues of more than $500 million by 2003. But not everyone is convinced that his entertailing empire will thrive. "I think a lot of people will go there and enjoy the vibes," says Music Trades magazine editor Brian Majeski. "But can MARS generate enough business to provide an adequate return?"

Meanwhile, Begelman likes to squire his rock group, the Martian All-Star Band, to his stores for some jamming. The sweetest locale for him may be Fort Lauderdale, where he bought and closed down the store in which that clerk had shushed him. In August 1997 he opened a MARS outlet a few blocks away.


Marcus: Trend D√Čj√ Vu

Entertailing: a New Age trend in merchandising, right?

Wrong, insists Stanley Marcus, the 93-year-old former chairman of Neiman Marcus, who knows a little something about the retailing trade. He learned the business at the knee of his legendary father, Herbert Marcus, who died in 1950. Stanley himself retired from Neiman Marcus 22 years ago.

By then he had logged 50 years at the company and established a reputation as a maestro at infusing retailing with drama. Among his coups: elegant fashion shows that became de rigueur in Dallas's high society, exhibits of paintings by Gauguin and Picasso to create buzz, and appearances by "cosmetics queens" like Elizabeth Arden and Est√Če Lauder that had the panache of Hollywood movie premieres.

So what does Marcus, who lives in Dallas, say about the heightened emphasis today's retailers put on entertainment? "I imagine that if you were back in Jerusalem in 20 A.D., you would have found some guy at the marketplace who had a snake in a basket," he replies. "Maybe he'd let you stick your head in the basket and see it only if you bought something."


Courting hoopsters

Oshman's Sporting Goods Inc., a chain based in Houston, is refashioning itself with fewer but larger stores known for offering indoor basketball courts to lure customers. Here's how the entertailing trend has taken off within Oshman's in the past decade.

Year Stores with courts Total stores % with courts
1992 5 170 3%
1995 18 129 14%
1998 31 64 48%

An insider's guide to Pebble Beach

The pin with the little white flag stood 510 yards away. To my left were jagged rocks sloping toward the water. I took a deep breath and adjusted my stance. I was on the famed 18th hole at Pebble Beach in Monterey, Calif.--sort of. Actually, I was in a Golf Galaxy store in the American heartland of Minnesota. Golf Galaxy, which bills itself as the "first interactive superstore," has five locations in the Midwest. In a small, dimly lit room outfitted with a state-of-the-art computerized golf simulator, I gripped a titanium driver, preparing to tee off.

It was near the end of the five hours that I had spent one sunny Saturday recently at Golf Galaxy's store in the leafy St. Paul suburb of Roseville, attempting to resuscitate a game that I had quit in 1978 (after wrapping a five iron around a tree). Even though the weather outside was perfect for golf, the store buzzed with patrons trying out Ping putters and Big Bertha drivers. It was also crammed with Ashworth, Izod, and other kinds of golf apparel, as well as with rows of videos and books. Golf bags decorated the walls. Golf scenes flashed by on overhanging TV monitors tuned to the Golf Channel. An in-store travel center offered brochures for golf excursions to Scotland and California. "This is a toy store for adults," the store's cofounder, Randy Zanatta, 40, told me. Zanatta and his partner, Greg Maanum, were executives at consumer-electronics giant Best Buy before they opened the first Golf Galaxy store, in April 1997.

In my tour of the store's interactive marvels, I warmed up on its 400-square-foot Astroturf putting green, surrounded by fake palms. I hit a bucket of balls into a mesh net at the indoor driving range. I even took a lesson from the in-house pro, George Shortridge (cost: $49.99 for a half hour). Two cameras photographed my swing, which a TV and computer monitor displayed. Shortridge reviewed it in slow motion. "You come unglued on the way down," he said gently.

Shortridge set me up on the simulator. (It costs $28 an hour, unlike the other facilities, which are free.) I slammed my first shot hard into a nylon screen, its flight triggering sensors that measure a ball's velocity and trajectory. Unfortunately, I had hooked it left, and the ball landed in the water. Shortridge reprogrammed the simulator to erase my shot. I hit again, knocking a drive that the sensors recorded at 174 yards into the middle of the electronic fairway. My luck proved short-lived, as I sprayed my next seven shots every which way. I scored an 8 on a par 5.

A triple bogey is nothing to brag about, but I had fun at Golf Galaxy. Sure, I missed the sunshine, but I didn't lose a single ball. --M.B.


Entertailing on the cheap

For almost 40 years Martin M. Pegler has lived and breathed store design. In his day job he is a professor of store planning and visual merchandising at the Fashion Institute of Technology, in New York City. Also a speaker and consultant, he is the author of Retail Entertainment, a book that showcases "entertailing" companies. In a recent interview Pegler explained the concept:

Q: What is entertailing?

A: Entertailing sounds like a concept that means you've got to provide bubble gum and balloons to everybody who's coming into the store, which is not the case. It can be as simple as adding music and serving customers wine, or it can be as incredibly elaborate and theatrical as a Disney store.

Q: Is it catching on?

A: You can't open up a trade publication without seeing articles on it. Retailers are talking about it constantly, and malls are hiring entertainment consultants as never before.

Q: Is Disney the gold standard?

A: Disney has perfected the whole concept of combining retail and entertainment. Walking into one of its stores makes you want to buy something. You are inundated with images.

Q: What if your pockets aren't as deep as Disney's?

A: You can do plenty of things that don't cost a lot of money. There's no question that music can be an addition to the store. In a men's shoe shop, you can put little atomizers in the air-conditioning system to give the store the smell of leather. Men respond to that smell. Research shows women will shop more in floral-scented areas. You can play MTV to attract the younger crowd. You want to create that fun feeling.

Q: Won't some customers turn up their noses?

A: You will always find people who will walk away. They don't want the noise.

Q: How simple can it be?

A: A women's clothing retailer could set up a space in the store where bored husbands and boyfriends could watch television or read magazines and newspapers while waiting for their wives to shop. --M.B.

Entertailers: a sampler

Store Headquarters Entertainment
Wish Superstore (apparel) Atlanta Parties with DJs, skateboard ramps
Stew Leonard's (food) Norwalk, Conn. Employees costumed as animals
Sneaker Stadium (athletic shoes) Edison, N.J. Indoor track and basketball courts
Zany Brainy (educational readings and children's items) Wynnewood, Pa. Authors' zoo animals
Last updated: Aug 1, 1998




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