By eyeing newspaper and website community events calendars in Portland, Ore., you get a true sense for just how well Horny Toad's first company-owned retail experience, dubbed the Lizard Lounge, is doing. Even Citysearch, a self-proclaimed leading online lifestyle guide designed to help people make informed decisions about where to spend their time and money, called the Lizard Lounge a place where "hip locals come for the clothes, but stay for the fun."
Gordon Seabury, president of Horny Toad, told SNEWS® the original reason for opening the store was to "better understand what the modern lifestyle customer wants or needs, to develop and test best practices for our products and brand and, ultimately, to be a relevant voice in partnering with our retailers and helping with their evolution and navigation through the new retail environment."
As the idea of a different kind of store took shape, Bob Davis, founder of Active Endeavors and now Horny Toad's director of retail, took the testing-ground concept and ran with it. He began to build a framework to create a place where people can socialize and interact -- and, if they are so inclined, perhaps buy a few things too. It was named Lizard Lounge.
"If you think about it, you socialize at work and at home -- maybe going to a pub or coffee house on the way to or from work," said Seabury. "We wanted to create that other place -- a place that is not just about shopping, but about engaging with the community by providing space for events, for playing ping pong with friends, sitting in comfy chairs and surfing the web, reading magazines, drinking coffee, going to see local bands play, looking at local art, tasting local wines…socializing."
With the design mantra of social hub and retailing lounge fully front of mind, Lizard Lounge opened in in July 2007 in Portland's Pearl District shopping area.
"It was not exactly the best time to be opening retail," Seabury told us, noting the market drop and subsequent crash soon after. "Everyone knew the fourth quarter (of 2008) would be bad, but no one had any idea how bad. Thankfully, we had one year of being open to gain some exposure before things went south."
The addition of Nau to the Horny Toad family in mid-2008 certainly didn't hurt either (Click here to read a June 24, 2008, SNEWS story "Now is the time for Nau 2.0"). In addition to nabbing a popular Portland brand that melded outdoor function with haute couture, Seabury brought on board another key retail mind: Jolie Giese -- formerly a brand manager for Nordstrom's Faconnable apparel brand. Initially, her role was general manager of Nau, but as of May 2009, she transitioned into the role of general merchandising manager for all retail, including Lizard Lounge, and wholesale for Horny Toad and Nau. Mark Galbraith, with Nau since its launch, and head of design, was named Nau's general manager.
Running a business
Seabury told SNEWS over the first six months of 2009, sales were up 65 percent over 2008. And while only 35 percent of the store's floor is used for actual selling space, it still manages a very respectable $400 per square foot in sales. Even more impressive is the fact that by the end of 2008, the store was at a break-even point, and it has operated profitably every since.
"We run a lean, high-turn business," Seabury said. "We receive deliveries three to five times per week, and we are turning inventory at a rate of six to eight times annually. We also completely re-merchandise our store every two weeks."
Both Giese and Seabury told SNEWS the beauty of not packing the store to the gills with product, and ensuring a lot of open space, is the store can be at max inventory or actually under-inventoried and chasing product due to under-buying -- but, ultimately, it does not look much different to the consumer.
Product mix is also very key to the Lizard Lounge. The store works hard to represent product that meets where the best of outdoor, surf, skate and fashion come together, Giese told us. Nau's addition to the product mix added a nice boost as well.
"When Nau came into the mix, that solidified the direction in how we would merchandise and mix the store and what we would look like," said Giese. As of June 2009, Horny Toad products account for 20 percent of sales, Nau 25 percent, and the rest is a mix of other leading brands.
And it is that very mix, and wide range of passionate consumers, that gives Horny Toad even more juice in its company tank to ensure it is on target with its perceptions of buying habits, trends and product mix.
"The Lizard Lounge very much serves as our laboratory and a bit of a 'canary in the coal mine' for our vision of Horny Toad and Nau," said Seabury. "If the store isn't working, it is likely a sign our instincts for the consumer and market is off, and thus, time for us to adjust the plan."
Which, Seabury pointed out, pays dividends not only for the company, but also for its many specialty retailers.
The fact that since Nau's company design headquarters are in a space adjacent to the Lizard Lounge, Nau designer Galbraith can and does work long hours on the retail floor. When there, he is watching how customers interact with product which gives him a huge leg up in designing new styles that retailers will soon see on their shelves. However, product mix and design mojo aside, the real magic at the Lizard Lounge is found in one key word, lounge.
While Seabury would not elaborate, SNEWS estimated when it visited that about a third of what one might define as the retail floor is dedicated simply to space intended for lounging, socializing and playing. On any given day, you might find as many people simply hanging out on comfy chairs, sipping fresh coffee, surfing the web, playing a spirited game of ping pong or even just gazing at the art on the walls as you see actually shopping.
It is the unique combination of Davis' experiential retail vision, Giese's retail merchandising vision, Galbraith's product design vision, and the community arts culture in downtown Portland that is built around what is known as First Thursdays (www.firstthursdayportland.com) which has played a significant role in the Lizard Lounge's early success.
Giese told SNEWS that the store gets anywhere from 250 to 500 people who show up for events -- local bands, artist debuts, winery tastings, open mic poetry and more -- which first all about community first, and second about shopping. Sure, on First Thursdays and during other special gatherings, the Lizard Lounge marks Nau product down by 20 percent to encourage buying -- this is a retail store after all -- but Giese insisted it is the community connection and the viral networking of friends telling friends that is the real gold mine for the Lizard Lounge.
Cloning the lizard
Although Giese was hired to help replicate the Lizard Lounge in up to five other regions around the country in markets that do not compete with existing retailers, Seabury told SNEWS the physical store expansion has been put on the back burner until the economy improves.
However, a new idea has germinated that takes the Lizard Lounge format of community events, partners them with key retail accounts around the country, and creates temporary "pop-up shops" to drive market awareness of both Horny Toad and Nau.
"The idea is to find prominent store frontage, which is becoming easier in this economy, and open for 10 to 14 consecutive days with a series of events -- charitable events, art openings, concerts, friends of the company receptions, retailer customer appreciation events, etc. -- all designed to create marketing buzz and brand awareness that will continue to drive sales even after the pop-up shop leaves town," Seabury told us.
He said he is working with Giese and Davis on the business plan now, and hopes to have three to five pop-up shops opening in the fall of 2009.
We asked Seabury if he imagined morphing this idea into smaller concept-shop Lizard Lounge experiences open year-round in key retailers. "It was part of our original plan, to identify a number of retailers who would work with us -- installing flat screen TVs, specialized fixtures and furniture -- but we discovered that with the economy, not many retailers were in a place to provide that kind of space or commitment."
While the economy has kept the Lizard Lounge concept-shop bandwagon from rolling out, Seabury told us that he expects to be able to add kiosks to select stores, similar to the ones that Nau had in its own stores when it first launched, so that a retailer's customers can buy product online, in the store, and the retailer benefits without having to carry the full range of product.
"Even doing this is a ton of work and the retailer has to be very committed, but this blend of POS inventory management, in-store sales and e-commerce is the wave of the future," said Seabury.
Call it the Lizard Lounge way of doing business.