Guest: Linda Johansen-James
Topics: American Kiosk Management, DTC Brands

Transcript:

Chris Ressa 0:00
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’m joined by Linda Johansen James. I’m excited for her to be here. Linda is the founder of the international retail group. Welcome to the show.

Linda Johansen-James 0:32
It’s a pleasure to be here, Chris.

Ressa 0:35
So, Linda, you’ve got a longtime in this industry. Why don’t you tell everybody what you’ve done? And what the international retail group does?

Johansen-James 0:48
Great. I’d love to. So for about 25 years I’ve been in this industry, my husband and I had a business called American kiosk management for about 19 years. And we were the largest owner operators in the world of carts, kiosks, and automated retail stores in the world. We operated about 1500 locations that our height. Wow. Yeah. And and by the way, all of those locations were ours. So we hired and trained about 54,000 employees over those. Believe you made people wonder why underneath is blind? Well, it is natural one no. We hired and trained about 54,000 people we amassed about $2 billion. And we were those people that they said oh you know those cart people that were operating in the common area. We did kiosks as well. And we started the automated retail as well that you know sold things besides chips and koken. And we did pop up stores, too. We did that for about 19 years. Selling our number one brand was Proactiv, the acne skincare. medication. We did that in five countries. And it was the most incredible business we absolutely just adored operating in the common area of shopping malls. We also were in airports, military bases. We just in store in store. So we’re also operated inside of Macy’s and the Bay in Canada. Wow. Yeah, we loved it. And my husband a smart Well, I guess I should say that a small company by the name of Nestle’s purchase the controlling interest in proactive and we operated with him for a couple of years. And and we decided at that time that it was time to, to, you know, part ways. And so my husband retired and I was a little too young to retire. And I love retail. So I started international retail group. And we’re a boutique consulting group that helps mainly direct to consumer brands, launch and test in retail. And we can do everything for them, where they can pick and choose what it is that they would like us to do for them. I also own a temporary staffing agency just for the retail industry where we can help retailers staff, either temporary so for a weekend a week or three weeks, or for the length of the test that they’re running. So

Ressa 3:49
very cool part of the retail space. Yeah, I’m curious when you had when you were running for proactive? How was the the deal structured with you guys? Was it like a management agreement that you had with them? Or had How did it had proactive hires you and then you just go and run everything? What did it look like?

Johansen-James 4:12
Well, you know, we we I have to tell you, Chris, we were absolutely so blessed. We had incredible partners, I’m sure you’ve probably heard of gothy rancor, the largest direct response company in the world. And we actually were their only retail distributors. And they were so brilliant Bill Guthrie and Greg rancor and and they still are, I mean, were such mentors to us, but we had a distribution agreement with them and we just bought the product from them. And we went out and opened you know Carson and chaos. And we we just you know we we did so well that in about five years into it. They called us up and said you know what? We’d like to be your part partners, and yeah, and we became partners with them for about 10 years. And it was it was incredible. And like I said, we ended up opening about 1500 locations in five countries.

Ressa 5:17
And so really cool. I’m gonna ask a simple question. I think I know the answer. But everybody, I think, always wondered as they walk through the mall, like, those proactive or whenever, like, do those really do well? Are they just marketing? Or like do those do? How well do those do?

Johansen-James 5:39
Well, let me tell you, Chris, we, you know, we, some of our locations Did, did. We, at our height, we had about 500 locations, carts and kiosks. And we did over our average locations did about a half a million dollars a year. And we did in 15 malls in the US and Canada did about $1.7 million off of one little 60 foot cart in the middle of the mall. And we did more than some inline retailers did. I mean, it was and we had one person working at time, one person at a time, and $40 kids. But I have to tell you that the reason we did so well, Chris is because we hired and trained, and retrained the most incredible people that work for us. And when people used to say, you know, we hate those people, they’re cart people, they’re not retailers. I would say you know what our people are retailers, we just choose to operate in the common area. And the reason we do is because everybody walks by you. And we weren’t the people that ran and chase. In the middle of the mall, our people were trained, they wore uniforms, they treated people with respect, just like walking in, we were the Nordstroms of the common area. That’s a good place to be really was.

Ressa 7:20
So now you’re in this consulting? And do you still do things with carts?

Johansen-James 7:26
I do. And I do. And I still think I still think there’s a place. Chris, I think we can’t overlook that at one time. You know, the carton kiosk in the common area and pop ups are included in that they used to even pop up stores. And I still think that there’s a place do I think that it’s 20% of the most the malls overall income now, I don’t. But I still think for people who want to test in the common area or test in shopping centers that can’t afford, you know, to test in an inline store that don’t have that kind of money. I still think there’s a place if their product warrants it to tests on a kiosk or on a card. I don’t think it were it’s where it was five years ago or 10 years ago. But yes, I do think there’s still a place. And you know, I was at a mall in Utah a couple of days ago, and they had like 40 carts and every single one of them was filled. But unfortunately, there’s still not a lot of new products that we see in the common area. So I think we still need to be curating and looking for those new and exciting brands. And I think we could do a lot with brand activations to not necessarily selling products, but looking for, you know, some other ways to for people to market in in the common area.

Ressa 9:03
Really, what do you think that a place where the common area activations and Carts has been very different is in the open air world? Mm hmm. Not many kiosks. We had a little bit of a food truck craze for a little while. But generally it’s Christmas trees and like and Home Depot put up their tent sale and things like that, but but not the same as the yesteryear of an enclosed Mall. Do you think that could ever get replicated? Or is it just there’s so many cars driving by it is what it is?

Johansen-James 9:43
I think that it could and I think that automated retail is the place to look at you know, when we I think that automated retail is still not really looked at as a form of retailing and I have to tell you that Gower Smith and I’m gonna give him a big shout out of zoom. You know, when he came to us 20 years ago and said, I wanted to put proactive in an automated retail machine, my husband and I were like, you gotta be crazy. Nobody’s gonna buy ice cream, unless they can talk to us, you know, they really need to be able to talk to us. And we, you know, it took him quite a while to convince us and the folks that got the Rancor, but you know, what, we worked very diligently. And that GUI, the customer interface part, there’s a certain generation that doesn’t want to talk to us, Chris, and when retailers finally are able to delineate and look at the, the, the, the generations and who wants to talk to us and who doesn’t, right, and be able to really maximize that. And we learned that with putting Proactiv in the airports and military bases and in shopping centers, where we couldn’t generate enough revenue to have a staffed model. But we could a proactive model. In the automated retail machines. Now you have to have brand recognition, right in order to put something into that into that machine. But once you have the brand recognition, you can use automated retail to really augment your other ways of retail. So having a store and then augmenting that with automated retail. I think that outdoor lifestyle centers, grocery anchored, and Home Depot anchored. You know, we’ve been looking at those type of centers now to put some of our brands that we haven’t looked at before. So I think we can use automated retail, I think we can use pop up carts and kiosks in some of those locations where we haven’t thought of before. And maybe it’s not outside but in an overhang or you know some of these locations have indoor food courts or places where it makes sense for us to put a retailer that we didn’t think to put an inline store. I think there’s so many ways today that we can maximize space and look at some other ways for these retailers to do business.

Ressa 12:29
Fascinating. Okay. I want to take us to the next part of the show called Clear the air. I’ve got three fun questions for you. Are you ready?

Yes, I’m ready. All right. Question one. When is the last time you tried something for the first time?

Johansen-James 12:46
Is this in business or personal anywhere? Well, I would say launching it was recently launching my retail magazine. I don’t even know how to write and I’m serious seriously, Chris. And I’ve launched this brand new retail magazine that now I’m like addicted to and so I would say just recently in this retail magazine,

Ressa 13:14
and what’s the name of the magazine for everyone out?

Johansen-James 13:16
It’s called IRG retail magazine. Sorry, it’s like nah, doesn’t have like this new fun name. But on the cover of this one is actually Chris Agway. From who lives in France and is a global retail thought leader. So? Yeah.

Ressa 13:36
Okay. Question two. What is one skill you don’t possess? But wish you did?

Johansen-James 13:42
Oh, my God, patience.

Ressa 13:44
Thanks. Yes. But lack of patience is how you scale up a car business from it. Took a zillion so

Johansen-James 13:54
but there are some times I wish I had just a little. Just a little.

Ressa 14:01
Okay, last question. What is one thing most people agree with, but you do not?

Johansen-James 14:08
Did you have to run promotions in your retail stores?

Ressa 14:13
I hear you there. Oh, I’m so cool. Well, I think that’s a great answer. Because I I think the the pandemic has helped a lot of groups realize that that’s that you’re right there. And they were able to maintain margins. And, you know, there was this race to the bottom. And since we couldn’t get the product, they didn’t have to mark it down. And it really created, you know, a windfall and I think some lessons learned on inventory management and markdowns in the retail industry. Yes. So we’ll see if it sticks because the moment one person reduces price, then there’s a herd mentality times that everyone feels like they need to so, but I think that comes back to a point you made, which is new products, new products differentiate. And, you know, if everyone’s selling the same thing, then it’s just a pricing game. So

Johansen-James 15:14
it’s so true. I so agree with that, Chris.

Ressa 15:17
Yeah. We’re gonna take a quick break here. And now a word from one of our sponsors.

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Ressa 16:16
Okay we’re gonna go to Nevada for barbell apparel. And what is the name of the town? It’s in Summerlin, Summerland, Nevada and why don’t you tell us the story. So let’s start with you know how you started working with this company who they are and then how they ended up here.

Johansen-James 16:41
I just I absolutely love this brand. So Downtown Summerlin, the outdoor lifestyle center owned by the Hughes Corporation I absolutely worship them they have been incredible to work with. They came to me because barbell apparel is a direct to consumer brand athletic fit apparel, which everyone is looking for. And especially during the pandemic, right, all of us looked great from here up and from there down we had on our yoga pants and jogging pants, right? So so they wanted to they wanted to launch into retail and and didn’t know what to do. So Jeannie, who’s the Senior VP of leasing. For Downtown Summerlin said I know just a person I’ve known her for 100 years and and she can help you do whatever it is you need to do. Long story short is that was in January, we signed the contract. We’re going to open our first store in April in the pandemic hit. And we were almost through with the build out and working through and then everything shut down. And Jeannie came to me and she said, listen, Linda, I’d still love for you to open in June. And the four gentlemen who own this brand, they they’re phenomenal. Chris, they’re CrossFitters who couldn’t find pants to fit themselves. And so they made a pair were really a gene company. So they sold a pair of jeans. And everybody said, Oh my God, you sold a pair of jeans. This is gotta be a company. And so they started manufacturing jeans and they went on Shark Tank, and they got a deal. And they turned it down because they didn’t want to give up half their company. So they had bootstrapped it for six years. And they morphed into doing, you know, athletic shorts and joggers and shirts and women’s and they’re just, it’s fascinating. And I went to Alex and I said Alex, you need to open he said, Well, if you can open on a shoestring budget, then you can open so three shores had closed in Downtown Summerlin. My original store design was for not because it was going to cost 60,000 So open it. And he so my COO and I went from store to store and we took fixtures from every clothes store that there was in Downtown Summerlin and we open the store for less than most about $8,000. And and, and Chris and Chris, and this and this was meal pieced together from fixtures from a closed forever 21 from a closed I don’t even know like three or four stores and we literally took dollies down close to Main Street and Downtown Summerlin and did it moved it ourselves and I will send you pictures Chris because you’ll be fascinated on how beautiful the store was. And everybody who came in said Linda you want to put the store up for a design how did you design this? And I said well and all on

and We actually merchandised it ourselves TJ and I, and we learned this was my first full fledged in line store, Chris that I had ever opened with apparel. And we killed it. And Alex said, if you can open every store like this $8,000 That’s all in with the exception, of course, the apparel, and we killed it. And this was in June during the pandemic, and, and 2020 and, and the first six months, we just absolutely killed it. And I’ll tell you, and I’ll tell you why. First of all, because we didn’t spend a lot of money. And what we spent our money on was employees and training, which I’ve always believed is just the most important thing that you can do. We didn’t discount, we didn’t run promotions, we took care of the people that walked through the door. And and it was it was incredible. And you have to have a great product, which we do. It’s an incredible product, the boys, I call him the boys I shouldn’t do that the man, the guys who barbell they’re incredible to work with. And while all the other stores started reopening, Chris, they would stay open from 11 to six. Well, people don’t go to dinner till six. So we stayed open till eight. So when everybody else was closed, we were open. And so guess who they shopped with? So the story is that we now have six doors. And it’s been an incredible journey. And I just I have to say if it wasn’t for Genie, you know, really pushing us to get open and working with us and discounting the rent to make to help us to open Chris, we would have never done it. thought there was no promotions. I mean, but But I’m saying the rent promotion. I mean, the discounting the rent for us to help us I know. We didn’t discount any of the clothing, I can tell you that. So, so it’s been incredible.

Ressa 22:09
I love this story in a 2022 world. This sounds like a story of grit from the 1970s. So it really was. So just so I make sure you sign the lease in January 2020. Is that when the lease was? And then what between January and April? What happened? Were you getting like permits, or what were you doing?

Johansen-James 22:34
We weren’t? Well, we were working on the store doing the build out getting it painted. And

Ressa 22:42
so you had spent all the money on the build out already?

Johansen-James 22:45
Yep. And then the mall had shut down. Wow. And so we stopped where we were. And we left the store as it was. And we didn’t we didn’t have to pull permits because structurally it was an old Chico so we didn’t have to we just kept it the way it was. So we were going to add all these beautiful new fixtures. I mean, we had budgeted. Yeah, yeah, so we just use Chico’s old fixtures.

Ressa 23:14
And how that’s amazing. How, how, how much had you guys invested in the build out before the got shut down?

Johansen-James 23:24
9000 Wow. That’s it,

Ressa 23:27
you’re doing all that and then and then you get shut down,

Johansen-James 23:31
and then we get shut down. And so we were shut down from March 1 until the end of May. And

Ressa 23:44
we owners were going to just say forget it and scrap it or did you think they were going to go back and want to Oh, they

Johansen-James 23:52
were gonna say forget it.

Ressa 23:54
They were gonna say forget it.

Johansen-James 23:56
So I begged so. So they

Ressa 23:59
were gonna they were going to scrap it they were going to be like this is you know, retails not for us. The pandemic’s assign whatever it would have been sure wouldn’t you

Johansen-James 24:07
right? I told Alex I said listen, if this were me, I’m not sure what I would do. But listen to me you’ve already invested this much you have the clothes, we have the employees. I will tell you that I will work the store myself to ensure its success. I promise you I won’t spend a dime more than I have to to get this door open for you. And you said okay Linda, if you promise me that you will be there and you will see it through and you will do everything that you can not to spend any money then go for it. And I and I did I worked that store open and closed myself and so did my COO and I still do by the way, which I still believe is important that if you are in this industry and you are helping a new brand launch into retail, I don’t care what the hell your title is. As you should be boots on the ground and walking the manufacturing floor because now when they come to me and asked me so what’s going on, Linda? I don’t have to call my CFO I don’t have to call the store. I know exactly what’s happening.

Ressa 25:14
Totally. That’s incredible. So both before this store, they were an online only direct to consumer brand. Yep. And how big were they international national?

Johansen-James 25:30
Yeah, if they’re international. They’re very successful. They have people like Joe Rogan. Tim McGraw, the strongest man in the world. Martines leases Nick. Nick the best I mean, they have a lot of big, big name people that wear their brand because they’re meant for for people that have smaller waist and bigger legs athletic built, they can’t find jeans or pants to fit themselves.

Ressa 25:59
Ay, ay, ay. I know the problem. I I was competitive CrossFitting for OC for years, and I stopped my garages. You could train for the Olympics in my garage I built out the overbuilt my garage gym. So I don’t know the brand all that well before this, and I did some homework before the call. But I am going to start to look at some of the clothes here because jeans that do what you say are fascinating to me. So

Johansen-James 26:32
well. Here’s the deal. You can run jump and squat and our pants we have a one year guarantee. And that they won’t rip or tear. You can climb rocks and listening to rock climbing them. You can I mean literally Nick strong comes in. If you look him up, Nick the best he comes in his thighs are huge. And I know I was a competitive bodybuilder I was a female bodybuilding judge, the men in my ear never wore jeans, because they pants because they were jogging pants or jogging shorts, right. And because it couldn’t find jeans to fit themselves. Literally Martines, Lisa’s and Nick come in our store in Summerlin, they put on our pants, and they can walk out the door wearing them. So these guys at barbell have a niche that that no one else has. I mean, I have a four way stretch, you just after this call, I’m going to send you some stuff. And you’re going to be like their biggest advocate because, and that’s why we literally and this is, this is where and after reading your questions that Danielle sent me, here’s where I really believe the difference is when direct to consumer brands launch and retail and I was in New York, but not this weekend, because I was in Salt Lake but the weekend before looking going down Madison Avenue, I was in Soho. And I was looking at all of these brands. And I really believe the difference between direct to consumer brands been successful, has almost 95% to do with the people that you hire and train to represent you. Then it does almost anything because people will come back if they like you, and especially even people look at now like my grandkids are in their mid 20s. And they never go to the malls. They never shop. They shop online. And the only reason that they will go to stores and shop is that number one they liked the brand. But number two, the customer service that they get. And this is this is new. I mean this is usually was my generation, not the young Gen Z’s and y’s and x’s and I mean, they didn’t really care about going to shopping centers, but they do now so we have to be spending more time on training and customer service. I’m a huge advocate.

Ressa 28:55
Well, and so now they have six locations. Where are they?

Johansen-James 28:59
Yep. So three and three in California. And so Summerlin, Salt Lake, we just, we just closed to Unfortunately, one of the questions you you asked was what are one of the challenges and one of them was that we had? We had short term leases and we lost two leases. And so we’re looking for new locations. So we had three in California and we’re down to one. Got it? Because we have because we did pop up leases because we were still testing you know, we were testing and unfortunately the the short term lease, you know,

Ressa 29:51
we the owner found another tenant.

Johansen-James 29:54
Yeah, I don’t like to say that. It was willing to pay As a whole heck of a lot more money than we were. And, you know, I, you know, I still struggle with that. But I also understand it from the developers side the way, I think.

Ressa 30:13
Just like just just like you said, on the retail side. Yeah. As on the developer side where I am, I can’t discount no promotion, of course.

Johansen-James 30:23
I get it, I get it. And listen, if I were on the developer side, and someone came in and said, Listen, if you give me that space, I’ll pay you three times more than what that person’s paying. Listen, I’m also a business person. There you go.

Ressa 30:34
And right and right now, person, and right now there’s a there, the tenant demand is strong. Right now, tenants are trying to open up stores like crazy, and it is the pendulum. The pendulum of leverage is shifting. So

Johansen-James 30:50
well. And you know, it’s fascinating to me, you know, when I was in New York, you know, look at Madison Avenue and Fifth Avenue, and it’s like, every other location is vacant, every other location, but you go to lifestyle centers, and shopping centers, and they’re 100%. Leased,

Ressa 31:08
yes, suburban suburban markets. Unless you’re anchored retail power centers, lifestyle centers, have come back and some and better than pre pandemic, and suburban environments are still challenged. You know, I think hybrid has definitely changed the game hybrid offices, people working remotely helped the suburban shopping center. And if they’re not going back into the office, that population that was there might not be there in that urban environment. So

Johansen-James 31:39
well. And you know, what, Chris, I have to tell you that if you have relationships, and I feel very blessed that over the 25 years, I’ve been in this industry, I have great relationships with developers, and they’ll tell they’ll tell me in advance, they’ll say, Hey, listen, Linda, this is what’s happening. So either your client, you know, this is where we need to be, or, you know, we need to look somewhere else. And so I think that the relationships that you build in this industry are playing out now. And that, that, that you can, if you can’t stay in the space where you’re at, then you can look at another space. Yep. So I think there’s a happy medium somewhere.

Ressa 32:23
This has been fantastic. I really appreciate the color on this story. So fascinating. I love that you were how gritty and scrappy you got to get this store up, open off the ground, and now they have multiple locations if they never tried the first one who knows if they would have any. So kudos to you. Fantastic story. I want to bring us to the last part of the show. I got three fun questions for you. Are you ready? Yes, I’m ready. All right. Question one. What extinct retailer Do you wish would come back from the dead? Well, worse. Woolworths love it. Okay. Question two. What is the last item over $20 that you bought in a store?

Johansen-James 33:03
A pair of barbell joggers.

Ressa 33:06
I gotta have to look at this.

Johansen-James 33:08
I know, I’m totally I’m gonna send you some.

Ressa 33:10
And then last question. Question three. If you and I were shopping at Target, and I lost you what I would I find you in

Johansen-James 33:18
office supplies.

Ressa 33:22
Fantastic. Well, listen, Linda, this has been great. I really appreciate it. Thank you so much. Well, thank you. Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you are a part of on our show. Please reach out to us at retail retold at DLC mgmt.com 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.