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Busy Beaver Center in Calcutta, OH with Joe Kallen

Joe Kallen Headshot
Episode #: 109
Busy Beaver Center in Calcutta, OH with Joe Kallen

Guest: Joe Kallen
Topics: Busy Beaver Building Centers, business expansion


Chris Ressa 0:01
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.

Welcome to retail retold everyone. Today I am joined by Joe Cowen. He is the CEO of busy beaver building centers in Pittsburgh, Pennsylvania. Joe has been in the retail industry for over 20 years and purchased busy beaver in the fall of 2013. I think he brings a really unique perspective to the podcast today. I’m excited for him to be here. Welcome to the show, Joe. Thank you. So Joe, tell the audience a little bit more about who you are and what busy beaver does.

Joe Kallen 0:58
It’s on the CEO of busy beaver building centers and busy beaver building centers as a regional chain of 25 Home Improvement centers in Pennsylvania, Ohio, West Virginia. And we

cover all the major departments and the home improvement industry. And appreciate you having us on board. Here they are.

Ressa 1:19
Terrific. So Joe, tell us more about your story because you’ve been in retail, working with some franchise organizations for a long time that started in 2000. Why don’t you take us through that journey a little bit.

Kallen 1:34
So in 2000, started opening up franchises called Rita’s Italian ice, which is based in Philadelphia, and my 2000 graduate of Slippery Rock University go rock opening those up in Pittsburgh area, and we opened our third location, we started to acquire the real estate to build more flexible in terms and so we sold the stores in 2006. And in 2006, I purchased another franchise called 100 got junk. And a franchise that very well was a very interesting franchise that we turned around sold in 2011. And then in 2011, my brother and I got into a franchise called Philly pretzel factory that he still owns and operates today. And in 2013, I acquired the majority interest in busy beaver building centers, which at the time had 14 stores. Busy beaver was founded in 1962. And at one time was the dominant big box retailer, they had 50 stores back in the 80s. However, with the competition and no long term strategic plan, busy beaver kind of deteriorate over the years and became the Forgotten brand. And so well, when I bought in 13, we started with 14 stores that were had 14 different locks and 14 different fields and 14 different operations. And we worked very hard over the next few years to standardize those and create a good brand. And since then, we’ve opened 11 more stores. So we’re very proud of that turnaround story. And our expansion will continue into Central Pennsylvania next year. So we’re very excited for the opportunity. And the opportunities come from busy viewer.

Ressa 3:20
Well, congratulations. You are the entrepreneurial spirit of America Joe, you started a franchise you bought another franchise, you became another franchisee then you bought another company that you owned outright. This is what entrepreneurs, you know, aspire to do. Tell us about what got you interested in becoming a franchisee of not just readers, but of any organization? Why was that something you thought was an interesting prospect for you.

Kallen 3:57
So at the time, it was the low risk factor. So franchises that have you know, hundreds of units are usually pretty proven right that you have a good track record and, you know, good creativity and I had to reinvent the wheel. So for me, it was very low risk and the investment was right. And there was good opportunity in our markets. And so each time that took that next step, those were the factors that I looked at investing in a franchise.

Ressa 4:24
Got it? At the

time. Have you thought about opening your own brand and not franchising one or did you were you pretty certain that you wanted to be an entrepreneur and this was a lower risk model to do that.

Kallen 4:37
If franchising was probably the role for me, I’m a very hard worker, but not very creative. So I didn’t want to have to create a brand. That’s that’s not my wheelhouse. But I know it could work hard and make it successful. So that’s really what allowed me to franchising at the time.

Ressa 4:54

So what is busy beaver up to today?

Kallen 4:59
Yeah, it’s a That’s a great question. Hope you have some time. But so you know, you know, again, busy beaver was really the Forgotten brand. At the time, I bought it in the Denver at 13. And that’s absentee ownership, very little reinvestment into the organization. Very little employee development. And so started day one with analyzing the organization and figuring out what the priorities were and then made a strategic plan that allowed us to remodel 14 stores, you know, create, we’re up to about 550. Now, so create a lot of jobs in the past seven years, which is very exciting, create a lot of career opportunities. And I really, really invested a lot in these properties. We’re fortunate enough that we’ve gone back and acquired a lot of the properties, so we own 16 of our 25 locations. So that’s made a little bit easier on some renovation periods and some some terms that are a little more friendly for us to start up a new store that ensured that their stores were successful. And really, over the last seven years, we’ve gone back filled markets that we skipped over years ago or never had a good opportunity to open a store. And now that we’ve really backfill the markets that we’re really interested in. Our focus is now to expand outside of the Pittsburgh MSA. So we’ve got stores in Ohio, we’ve got stores in West Virginia. And in 2022, we’ll be making our way into Central Pennsylvania with that four to five new store openings. So

Ressa 6:41
terrific. That is very good. I’m curious

how did the opportunity to acquire busy beaver

come to you

Kallen 6:51
and networking. So there, I got to know their CFO on the golf course. And just over time discussions about the future of busy Beaver and what the challenges were and what they’re faced with it. This was a really, really great opportunity. And God

Ressa 7:12
kudos to you networking here that everyone networking leads, so a lot of opportunities. When you got there, and you took over busy Beaver, what what were the initial initiatives after you dug into the numbers and you dug into the stores? What were the key priorities for you?

Kallen 7:30
There were really two key priorities that took precedent. One was associate development. We had 14 stores, training associates 14 different ways. And there was very little alignment. So that was number one. And number two was the merchandising. So we it would be very common to walk into a busy Beaver and find a pipe but not have the 90 degree elbow. So it you know, we didn’t have the the merchandising, right. So we aligned ourselves with true value. True Value does a very good job with planograms and programs. And they helped us a lot in that area.

Ressa 8:15
Got it? Did you bring on a new buyer, I’m assuming you probably did or

Kallen 8:20
so we’ve expanded that department. So we’ve had the vice president merchandising. Mike subotnick has been with us for 26 years, I believe, started in the stores and worked his way up, as most of our executive team has. And he’s changed a lot in the past seven years in a very good way in terms of how he looks at assortments and how he buys product. And that’s actually changed a lot over the past year with the pandemic and and what we’re seeing going on last year, year and a half. So it’s constantly changing environment and we’re able to adapt. So

Ressa 8:57
fantastic view all done anything from a digital perspective, given everything’s going on. And how are you looking at the convergence of online and physical presence in retail.

Kallen 9:10
So before the pandemic, we had very little, we had no online presence. We basically had an informational website, and that was it. We have planned the third quarter of 2019 started our transition in EECOM. And so we actually had a little bit of a good start. Before the pandemic had March and really started to affect us. We were able to go live in July with our E commerce platform. That time, it was limited to add items for buy online pick up in store. And we now have two thirds of our product online. I’m anticipating that by the end of May will be fully online with our E commerce platform. So we’ve made a lot of good progress. Those continue to be a larger percentage of our sales each week. We actually are I’m very amazed that the cups of customers into that econ field and how it’s progressed over the past year or so, been a very positive for busy beaver.

Ressa 10:11
That’s great. What a good time to start with q3 of 19. At least you were a little ahead of some retailers who weren’t, who weren’t there yet. You were on your on your way and already thinking about it. And I think that’s important to be successful throughout 2020. That was an important piece of being successful to be ahead of that, and at least thinking about it, and not having it be the first thought in April of 2020. The last question, I’ll, I’ll say, I’m busy beaver.

You’ve historically built businesses up and

and sold them. And I know it’s private. But it sounds like you’re still in growth mode, you went from 14 to 25 stores, and you’re continuing to expand in other markets, any sale or anything. Major transaction coming soon. Now,

Kallen 11:04
this is it. For me, there’s a biggest difference between franchising and the independent, is that there’s there’s no boundaries with the independent. So we have the opportunity to expand rework our model, modify our model was it’s needed. And this is this is it for me. So I’ve got five kids ages 13 and under. So hopefully, they’ll, you know, at least some of them will make their way into the business and it’ll become a legacy for me and, and our family. So I’m very excited about it.

Ressa 11:37
That’s incredible to piggyback off that, how is competition? You know, obviously Home Depot and Lowe’s and now Harbor Freight tools and all the hardware folks, it’s a competitive business, you obviously have a legacy brand, how is competition these days?

Kallen 11:53
So competition has been interesting, you know, I guess anybody that really sell similar products is technically a competitor, right? Except that a lot of retailers has gotten in everybody else’s space. So you know, you have gas stations selling mulch, you’ve got grocery stores selling plants. So you know, I guess there’s there’s a lot of competition, what we really focus on is number one, we’re really focused on county seat secondary markets, you know, we’re not in the major metros main a main that’s not our game. So, you know, our locations are more in bead markets or county seat type markets, we pride ourselves in customer service. So you know, we’re going to greet you at the door and find you. You don’t have to come find us when you’re looking for service in our stores. And you’ll find our associates are very well trained. We invest a lot in our training programs. So there’s very, very few questions that we won’t be able to answer in terms of solving problems for the consumer. We also try to adapt our merchandising to the market. So we realize that not every markets the same even if they have similar demographics. And so we try to carry products that may be special to that market, or local vendors that we purchase from that market to sell the products. So you know for busy beaver we’re focused on busy beaver. There’s a lot of competition out there, this doors opening every day. But we focus on what we do best. And we continue to execute very, very well.

Ressa 13:26
And for context, how big is the average busy beaver in square footage?

Kallen 13:32
So if you if you would have asked that question in 2013, the answer would have been about 30,000 square feet with a outdoor lumberyard. Today we’re opening stores around 55 or 60,000 square feet with outdoor lumber seasonally. Wow.

Ressa 13:48
So all the headline news about retailers getting smaller is not true for busy beaver.

Kallen 13:53
So that’s a great question, Chris. And this is one of the reasons I really appreciate you being an advocate for retailers is, you know, the regional retailers are expanding, we just don’t get the headlines. So, you know, we’re the ones buying up the okay markets and taking their space, we’re the ones redeveloping those properties. There’s a lot of really, really, really strong regional retailers out there absorbing all this dead space. We just normally don’t get the headlines. But for us, our goal next year will be to open for five new locations, which we assume 50,000 square feet will absorb, you know, quarter million square feet next year of space. We don’t build ground up so we’re always finding second or third generation space. And so there’s a lot of us out there doing very, very well and, and those headlines are not representative of the regional retailers.

Ressa 14:44
Kudos to you, Joe. I agree.

Let’s get that message out there. Great. That’s great to hear. Let’s talk a little bit more about Joe for a second. I’ve got three questions for you. We call this clear the air you ready? I am Question one, when’s the last time you did something for the first time, Joe?

Kallen 15:05
Something for the first time. So about a few weeks ago, I downloaded an app to start to learn the language Hindi. So so my children have some friends from India. And I’d like to be able to communicate with our parents better. So that is very fresh and thick. Once I get under a certain threshold of emails per day coming into my inbox, I’ll be able to really pay a lot more attention to it. So

Ressa 15:32
that is a unique one. That’s great. And maybe that plays into the next one, which is question two, what is one skill you don’t possess what you wish you did?

Kallen 15:43
Besides language? I would say that creativity, you know, I’m not. I couldn’t sit down and draw something real well, I couldn’t sit down and make our logo and something better. So I lack creativity. On the artistic side. I wish I was a little stronger there.

Ressa 16:00
I hear you. I am not artistic, that’s for sure. Last question. What is one thing most people agree with, but you do not

Kallen 16:10
celebrity endorsements.

Ressa 16:13
Interesting. Just curious, has that come your way with busy Beaver, some local Pittsburgh celebrity, something like that?

Kallen 16:23
You know, we’ve had some good opportunities that we have not capitalized on. Up until recently, speaking on podcasts is not something I would have gone out and done traditionally, my team has encouraged this. And so I try to listen and do what is right for busy beaver in the brand. So we’ve traditionally been very quiet flow under the radar. So we’ve we’ve avoided some opportunities that we may have had in the past that we might take a look at again.

Ressa 16:53
You have to be open to new ideas. So kudos to you if I want to go back to that was great. I want to go back to busy beaver. There’s one thing in my notes that I didn’t ask. Everyone’s talking about supply chain issues. And you’re hearing this from major retailers? How has that impacted the regional retailer, like yourself, and how are you navigating those waters.

Kallen 17:19
So we’re really no different than the boxes, you know, the supply chain, supplies the industry. And so we’ve, we literally fight for our inventory. Now we’re out there every day, making calls trying to establish the relationships. We cut POS for seasonal back in October for 40%, more than than last year. So we tried to get ahead of that buying. We’re landing products earlier than we ever have. So we’ll be landing our winter goods in July this year, which is crazy to make sure that we have our goods and can react. If we you know, orders are canceled or something happens with those orders. So we’re we’re fighting for our inventory every day. We’ve got a great merchandising team that fights hard every day. And we continue to do that on behalf of our consumers and our customers. And we’ve had a lot of success.

Ressa 18:17
So you obviously have a DC where where you have a distribution center.

Kallen 18:22
We do. It’s located at our office in Pittsburgh.

Ressa 18:26
And so in July that DC is going to have snow shovels

Kallen 18:31
and hoes shovels wood pallets, heaters. So yeah, it’s where our stores are overflowing with goods. We’re sitting on, you know, many million dollars or more of inventory today than we we did a year ago. So the stores are stuff packed the DC stuff path, everybody’s overflowing inventory to make sure that we have it to to serve our consumer.

Ressa 18:54
That is that is so interesting, because one of the things I keep hearing in headline news was retailers learn their lesson on inventory control and making sure they don’t get caught with goods that they can’t sell so they don’t have to mark them down hat and as a real estate owner sometimes it’s concerning when you walk into a retailer and you’re not seeing the shelves filled in. Right now there’s definitely retailers where the shelves are not full and you’re thinking what’s going on here. One of the things we keep hearing is the positive stat or scarcity creates margin and you don’t have to mark down product. How are you thinking about this inventory management you have a lot of inventory more than most of your peers right now. It sounds like

Kallen 19:49
it’s that’s a great question, Chris. So that’s I had to look at as a pie and there’s a lot of pieces right? So the one of those pieces number one or that we’re sitting on have many more months of inventory than we have that past. So if we looked at a three or four month inventory burn off in the past, you know, we’re looking at nine to 12 months now. So, you know, we’re making buys on inventory for winter goods as we speak, because we just don’t want to take the chance of not having that inventory. The second piece of that is, I don’t think we’ve changed really our cadence on markdowns and slow moving inventory. So slow moving inventory is still slow moving today, with transactions and demand up as high as it is, it’s probably still slow moving in six months from now. So we really haven’t changed that cadence, we still want to move through some slower the inventory that we have and make room. The third piece of that is, we certainly have some outs, right? I mean, a great example that is our spray paint vendor, there’s scarcity on the CANS right now the manufacturer, so they just the demand is so far up right now. And the can’t keep up with that demand. So we’re constantly trying to find larger buys on items that we are seeing scarcity on. And we’re going to stock it and very deep. The fourth piece of that pie is busy beavers Fortunately, we have a very strong balance sheet. So we have the ability to execute on buys very quickly. So anything up to a million dollar purchase, or Vice President can sign off himself Anything over that need my signature, and we don’t sit on deals very long. So we will react very quickly to opportunities. And having a very strong balance sheet allows us to do that. So we’re not afraid to buy early and sit on that inventory if we had sales.

Ressa 21:52
That is a great point yesterday on LinkedIn, the CEO of Saks off fifth said the number one thing to thrive today.

And that’s an off price retailer for her was being liquid. Because you have to be able, as consumer trends are changing, you have to be able to make the opportunistic buy, if you can’t buy the product, you’re toast. And I thought that was really interesting. And you’re highlighting the same thing here, which is you have to be able to make a deal and get the product in the store.

Kallen 22:29
Yeah, and to us there’s nothing that our vendors especially our clothes, our vendors like better than an answer very quickly and payment very quickly. So you’re tops on their list if you can execute on those two things.

Ressa 22:40
Got it? That makes a ton of sense.

Fantastic. Well, the last piece of this what can we expect from busy beaver going forward? What should the consumer What should people in the real estate or people in the retail industry what should we expect from busy beaver.

Kallen 22:58
So busy beaver over the next three years a little bit four to five stores per year. So we anticipate growing from 25 stores to 40 stores in next three years. We anticipate keep being a very, very tight culture. So our associates truly are not numbers to us. We pride ourselves in knowing our associates are sorted very well. So that culture is so key right now. It’s always been key. But it’s more important right now, as hiring challenges exist all over and retail will continue to execute very well on the merchandising side to make sure we have the prod the right product for the right time for the right consumer. So we will we will spend a lot of time and a lot of dollars on inventory. We also have a significant initiative behind training. So we have training along with the education associates in our stores every day. With many consumers, taking dollars that were traditionally spent in entertainment and travel and moving them into the home improvement industry. There’s a lot of new DIY errs out there. So they need assistance and problem solving and how to do projects. And we want the zebra to be the first store that comes to mind when they need help solving those those issues. So that’s what you can expect from busy beaver next three years.

Ressa 24:20
What a great point on the first time DIY errs. I hadn’t thought of that. What an excellent point. I am one of them. So and there’s nothing that feels better walking to the store and leaving with the product and knowing what I’m doing when I leave because it’s rarely the case. So that’s a that’s a great point.

When you’re great.

You did I was going to move off of this but you did mention something that I am hearing a lot of which is hiring and the challenges with hiring and all the government assistance is making it more challenging. Have you broken through


Kallen 24:55
That’s a great question, Chris. So you had noted earlier about the networking That’s never been more important than that at this time. So we have used our network of associates and managers to really have a grassroots recruiting effort. You know, friend of a friend type of thing, and we’ve gotten a lot of great contacts. We started the year with 63 openings at busy beaver. And that’s not including our seasonal

Ressa 25:28
hires. That’s probably scary for you.

Kallen 25:32
It is it truly is. But we’re actually down to about 10 now, and our seasonal hiring has been very, very effective. So this this grassroots effort has been very successful over the last three to four months. We found a lot of success there. We recruited from many areas, not only in the, in the markets that we serve, but even outside those markets for people looking to relocate. We’re getting to them before they’re putting the resumes out for relocations. So we’ve had a lot of success in grassroots recruiting.

Ressa 26:09
Amazing, that is a great story, the grassroots recruiting and it’s working. Going from 63 to 10 is not easy. I know from the hiring front, so it is not easy. So kudos to you.

Kallen 26:21
Our team gets all that credit. So they they’ve done an amazing job to make that happen.

Ressa 26:27
Good stuff. All right. I want to move to the next part, which is story. So show you have a story about a busy beaver that opened and where are we going with town.

Kallen 26:42
So they have a great really good story in Calcutta, Ohio. Market busy beaver was in 40 years ago and did quite well. But that store closed maybe even before I was born, and we liked that market a lot. So the issue was is there was no boxes that were available and we weren’t going to build ground up. So the Kmart in that market was for sale, it was an operating Kmart. And we made the decision to buy the Kmart in hopes that the trend of Kmart with store closures would eventually come full circle to Kolkata and we could open a store. Well, about a year after we bought it we got to notice that this was a store that was closing and so the store closed and we started construction next day and and opened that store a few months later. It is now our number one store. The numbers in that market are incredible. We’re very excited about that market. We love the Calcutta market and the store manager. That location, Scott actually grew up not too far from there and worked at that Kmart as a kid. Oh my god. So he’s he’s now managing the highest volume store in our company. And it’s just a lot of good stories about about cow kind of market. So wow, that is a great story. It’s also a market that is the first one that my twin boys came to the grand opening with me and got to cut the board and hanging out with dad for the day. So it was very, very proud moment for me as well.

Ressa 28:18
So we have to unpack this. This is a great story. So first off was the Kmart for sale.

Kallen 28:26
The Kmart was the investor that owned it was selling the game.

Ressa 28:29
Okay, so that’s the first to sell the Kmart. So you decided this is serious forward thinking because I am assuming Kmart had options. They did actually,

Kallen 28:40
believe it or not Chris they had my memory is correct six, five year options left.

Ressa 28:47
So they had 30 years of least control. Your goal was to make sure that you could put a busy beaver in that box sooner rather than later. You bought the building so now you’re a Kmart landlord, right? Kmart is paying you rent, that’s fine, but you really bought the building because you want to put a busy beaver in and the reality is the that you could end up waiting 30 years before you actually got a busy beaver

Kallen 29:15
collecting the same rent that was executed in 1981

Ressa 29:19
Collecting the same rent that was executed in 1981. And you bought that. And I think that to me, is the epitome of the entrepreneurial spirit. Because there’s risk in that that you know, for some public companies and some other retailers that they wouldn’t take, right you knew that was the location for you. There was no other boxes and you took the risk, which you calculated as a lower risk because you assumed that eventually Kmart is going to close their store. However, you can’t be certain because they have 30 years at least control and they could assign that lease

Kallen 30:01
That’s correct. They could have sub leased it, signed it out, and we would have still been stopped collecting rent from that was never increasing 1981. So a lot, a lot of risks there. But we were we were prepared to take that risk and hopeful that the trend would continue with their model. Unfortunately, it did work out very well.

Ressa 30:21
And when they decided to close, was that on a natural lease expiration, or did you end up having to recapture?

Kallen 30:30
It was on the last round of bankruptcy that they closed? A few 100 stores? We were on the list.

Ressa 30:36
You were on the list. And so again, that at least could have gotten bought in, in a bankruptcy court. Did you go to the bankruptcy court?

Kallen 30:46
No, actually, we got a call from the liquidator about the lease saying that they’re gonna be marketing these leases, and do we want to bid and we said now. And we were going to take our chances with somebody bidding on a lease and calculate Ohio. And fortunately, there were no better. So we we got the space back and started construction the next day.

Ressa 31:09
Unbelievable. But there had to be a little bit of pause. Where did you come back and talk to your team and say, we might want to bid on this lease because the liquidator call says we’re going to market this man that would have disrupted your whole business plan if Ali’s or someone else came in to to buy that?

Kallen 31:29
Yep. So that’s that’s a great question. So we did have those internal conversations. And they were actually pretty quick, with consensus among the team that we were not going to bid on the lease, with consensus that there was a very low risk that a developer would come in by lease and try to break up the space, even though there was 30 years of term there. So we took a bit of a calculated risk, and fortunately, it paid off.

Ressa 31:58
Kudos to you. That’s, that’s great. Now, you mentioned previously that your store of tomorrow, the future busy beavers 55 60,000 feet. I don’t know Cal cut Ohio, but I’m assuming this Kmart is larger than that.

Kallen 32:15
It is there’s a 30,000 extra square feet and we have an LOI out on that space. We weren’t sure exactly what we’re going to do with that extra space at first. So Calcutta is a really, really great market. And we actually wound up taking about another 10,000 square feet. So we have 68,000 square feet in that market to expand assortments as they become available, so you know farm and ranch and pet is a great example. We do really really amazing sales in that market and we have a smaller assortment so we’re gonna be expanding those assortments that are and obviously that requires more space. So we didn’t want to sublease that space until we’re starting that we had the space we needed for that for that market. So once we made that decision, which was really the end of last year, we started to market that additional space. And we actually have an LOI Alba it’s going to lease hopefully next week or so.

Ressa 33:17
Got it so and how much space is leftover for that new tenant?

Kallen 33:22
30,000 square feet are gonna be taken well 30

Ressa 33:26
That is

exceptional. So you’ll be a landlord. Do you have other tenants in your portfolio?

Other than this one? Yep. So we have

Kallen 33:37
20 in total properties across three states and some of them have busy beaver. Some of them don’t. The majority though, we’d like. We’d like the opportunity of buying centers that either have a vacant box and relocating or opening a new store. And we have a relocation happening right now. Mount Pleasant, Pennsylvania, we bought the shopping center right next to us the 200,000 square feet but had a 56,000 square foot vacant grocery store. So we’re literally locating our old store that’s 30 years old, right next door, and brand new store and we understand that as well. So we like that model. We’d like controlling our future and we like bringing a lot more footsteps and traffic into the centers that will help others other tenants.

Ressa 34:24
When you build out a store is the product coming from busy beaver? Of course. It’s great. Does that store get the credit for it? It sure does. Oh, that is great. That is great. So that is great. And

one of the things I’m curious about is let’s say that landlord in Calcutta

decided the investor wasn’t going to sell it was such a below market rent 1981 And they let Kmart go and beat came available. And but they were only willing to lease would you have leased the space? No.

Kallen 35:07
So the the interesting thing about us is, we’re both real estate investors and we’re retail operators. So those are two great hats to have, especially when your portfolio really aligns with the demographic of where you’re looking for busy beaver. And so we we almost exclusively purchase our properties instead of leasing. If it’s the right market, we certainly will lease. But we prefer to buy our properties that allows us to not only amortize those costs over a little bit of a longer period to keep the rent low and make sure the the operations are successful, but allows us to change things if we need to without having to go through a lot of red tape. So we want to modify a garden center or take out fencing, we don’t have to ask anybody’s permission to do so. So it allows us to react very quickly to the market, and make changes that are necessary to be successful and stay in the forefront. So So that’s very important a busy beaver.

Ressa 36:06
So in a new market, where there’s not an opportunity to buy, but you really want to store you would lease you have some leases today where you do lease correct. We know where any of those stores that you did deals on? Yes, yes. And those were scenarios, those are scenarios where you wanted to be in the market, and they’re just you weren’t waiting around for the opportunity to buy. Correct. Got it? Well, a fascinating story. It is the number one store in the chain, which is astounding that it turned out to be that way. By the way, speaking of sales, sales have gone up since the pandemic started for you how what type of increases are you guys seeing?

Kallen 36:52
So on a same store sales perspective, we were pre pandemic, we’re used to seeing, you know, six 7% of your sales growth, same store basis. The pandemic has has driven sales beyond anything we’ve ever seen. So we’re seeing 30% comps, last year, and we’re seeing again 30% comps this year. So the the consumer purchases that historically have been into entertainment and travel have made their way into other industries. And we’re one of the beneficiaries of those that transition of consumer habits and spending. So

Ressa 37:35
right now your average store volume has completely changed.

That’s correct.

Kallen 37:42
Wow, even our legacy stores, even our stores that are were built back in the 70s. I mean, we were founded in 1962. And we still have stores in the portfolio that were built in the 70s. And you know, those are very mature markets. We’re seeing tremendous growth out of those markets as well that we just didn’t anticipate.

Ressa 38:03
So I think the question that a lot of retailers are facing and it’s, it’s it’s different for you is how do you maintain that market share?

Kallen 38:13
And that’s a great question, Chris. It’s a it’s a question we challenge ourselves with every day and so we go back to number one customer service, which is amazing trainings training programs for our associates so they can serve us our customers to is to make sure we have the product so as you mentioned competition it’s very easy for somebody to walk out empty handed and go to another store a couple miles away so we want to make sure that we have the product so we we really pride ourselves in customer service and merchandising efforts others the two key factor right

Ressa 38:47
now are so 30% comp some just mind blown art. Are you seeing average basket size grow?

Kallen 38:58
We are there’s a couple reasons for that though. So again, if you go back to the pie, there are several pieces of why that happens. The first is inflation in lumber right now and building materials is crazy. Two By Four by aid that we were selling last year for 299 is 699 this year, and there’s just no end in sight for that coming down. So, so product the retails have have increased to as inflation, just the natural course of inflation has been a little stronger over the past year than in past. And three is the demand. So when a new DIY er comes in our store, they’re typically buying for the project, not just buying the paint or buying the paintbrush, the tarp the rollers, they’re buying a lot more as a first time DIY er, than somebody that’s been a DIY ER for years and already has those those supplies.

Ressa 39:56
Oh, that’s an interesting one I hadn’t thought about Then is an interesting one. Okay. Well, Joe,

this has been fascinating. Anything else about busy Beaver, we should know what a great story, the whole thing fantastic.

Kallen 40:13
Probably the two things I would want to continue to reiterate is, is our culture. Again, we’re looking for associates every day as we grow. We have an amazing culture, very close knit culture and for, for prospective employees, that’s, I think, extremely important. So that’s number one. And number two is landlords love the national tenants and they love that strong credit. But there’s a lot of regionals that have very strong credit very strong balance sheets that are expanding, and we want to be thought of amongst landlords as potential tenants or in centers that the developing as well as the National so

Ressa 40:58
that is perfect. What a way to end

before we close out,

and the last part of show is called retail wisdom. I got three questions for you. Are you ready, Joe?

All right. Question one.

What’s the last item you purchased in a store over $20?

Kallen 41:17
Mountain Bike, mountain bike it Dirty Harry’s in Verona, Pennsylvania,

Ressa 41:22
and he got local retailer Dirty Harry’s question two. What extinct retailer Do you wish would come back from the dead?

Toys R Us? Understood? And last question.

We’ll make this close to home Joe. Normally, I say something different, but I’m going to change it up on the fly. Joe, if you and I were shopping at busy Beaver and I lost you what I

would I find you in

Kallen 41:50
you may not find me an aisle. So sometimes for me, I’m more focused on the merchandising than maybe necessarily the product. So I’m a roamer, I like to look at the signage, the merchandising, the pugs, where retailers are doing. So you probably won’t find me in one section, you’d find me wherever there was new merchandising and planograms being set. So

Ressa 42:10
perfect. All right, said like a true merchant. Well, Joe, this was fantastic. I really appreciate it.

Kallen 42:19
I really appreciate you again being a voice for the regional retailers because we again, we don’t get the headlines that we probably shouldn’t but we really appreciate you being the voice out there. So thank you.

Ressa 42:28
Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode

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