Small starts in big malls: from clothing to watch repairs, pushcarts are populating malls, train stations and airports, giving fledgling entrepreneurs access to tons of customers at low start-up costs.

From clothing to watch repairs, pushcarts are populating malls, train stations and airports, giving fledgling entrepreneurs access to tons of customers at low start-up costs

WHEN THE NEWLY RENOVATED UNDERGROUND Atlanta Mall was soliciting potential store owners in 1989, Adeena Smith was one of several African Americans to snare a coveted contract. However, Smith's chances of becoming a retailer were almost dashed when she was unable to renovate her space or order enough inventory in time for the mall's grand opening. A couple of weeks short of the deadline, she had to give up the store.

In spite of the loss, Smith didn't let go of her dream. On the day the doors of the 225,000-sq.-ft. Underground Atlanta Mall opened, Smith was indeed opened for business--but not as the owner of a retail store. She was the proprietor of a 6-ft.-x-3-ft. pushcart, hawking Georgia nuts and pecans.

Six months after Smith opened at the Underground, she changed her inventory from nuts to customized caps and renamed her portable business Head Gear. In the last five years, she has opened and closed 10 other carts, grossing $2,000-$7,000 a week on average.

Today, Smith, 41, has graduated from pushcart entrepreneurship to a full-fledged retail operation. In 1994, she opened Hats Under Atlanta, an underground boutique, featuring hundreds of hats in all shapes, sizes and colors. The store grossed close to $200,000 in sales revenues in its first year.

While it has taken a half decade to realize her ambitions as a retailer, Smith doesn't regret the path she took. "If I had gone into a retail store instead of a pushcart in 1989, I'd be out of business today," she says. Indeed, pushcarts can be less costly and risky to launch than full-fledged retail stores, while offering access to thousands of customers and a substantial earnings potential.

Like Smith, many budding African American merchants are finding specialty retailing--which encompasses pushcarts and kiosks--a viable business alternative. In fact, these pint-size enterprises are popping up everywhere these days, including malls, train stations, airports, bus terminals and even college campuses. And they allow merchants to peddle a host of wares, ranging from exotic jewelry to low-fat yogurt sundaes.

"Fifteen years ago, the industry was dominated by housewives who needed flexible schedules," says Robert Grahamslaw, general manager and development director of the specialty retailing program at Philadelphia's International Airport. "Today, a growing number of entrepreneurs see it as a great opportunity, especially those who may not have had enough ready capital as other groups historically have."

The percentage of African Americans in specialty retailing has risen significantly in the last five years, according to Grahamslaw, who once managed the Underground Atlanta Mall. Roughly half of the 60 pushcarts at the Atlanta Underground and more than half of the 32 at the Philadelphia International Airport are black-owned.

No doubt, the specialty retailing business is booming at a time when many well-known retail chains are filing for bankruptcy, closing their doors for good or reducing the number of outlets. However, "the retail opportunity created by this crisis comes in the form of new merchants and products being given their shot at success," says Robert A. Norins, publisher of the Mall St. Journal ($19.95 for a one-year subscription; 609-482-7600), a Cherry Hill, New Jersey-based quarterly publication geared toward pushcart/kiosk entrepreneurs.

Still and all, specialty retailing is like any other business in that a poor business plan, product, or location can push the entrepreneur's profits out the door. And the merchant has to effectively manage the cart/kiosk--from inventory control to cash-flow analysis--to keep the business running smoothly.

THE RISE OF SPECIALTY RETAILING

There is a small but distinct difference between a pushcart and kiosk. Pushcarts are decorative vehicles that allow merchants to sell novelty products. An entrepreneur can license such a vehicle through specialty retailing programs that are sponsored by malls, shopping centers, airports and other outlets. Kiosks, which fall under the jurisdiction of these same retailing programs, are usually enclosed, semi-permanent structures that require slightly more start-up capital.

On average, it costs $150,000 in seed money to open a mall retail store, plus an extra $7,000 a month for rent. But a pushcart costs only $3,000-$8,000 in start-up capital and an extra $1,000 a month in rent. An entrepreneur launching a kiosk can expect to pay between $10,000 to $18,000, with an average monthly rent of $3,000. However, in November and December, when mall traffic thickens with holiday shoppers, the leasing costs for pushcarts and kiosks can triple. Then again, some carts and kiosks gross $500,000 in a 10-week period during holiday and peak seasons.

This is a drastic change from 20 years ago when pushcarts and kiosks were smugly viewed as a labor-intensive peddler's trade with unimpressive profit margins. That perception changed in 1976 after the Rouse Co., a property developer based in Columbia, Maryland, established the first specialty retailing program at the Faneuil Hall Marketplace in Boston. When the retail industry took a dive in the 1980s, local malls and shopping centers adopted similar programs to shore up eroding bottom lines.

"With all the closings and consolidations in retail, the shopping malls needed people to take the empty spaces," explains Joseph Weishar, the founder and president of New Visions Studios, a New York-based retail consulting firm.

Pushcart and kiosk programs have grown enormously over the last 10 years. They are now in three-quarters of malls nationwide, compared with one-third a decade ago, according to Mark Schoifet, a spokesman for the International Council of Shopping Centers (ICSC) in New York. Another indication that the industry is growing comes from ICSC's annual temporary leasing conventions. "When we held our first conference in 1988, we attracted 50 people," Schoifet notes. "But this year, we drew over 800 people."

The pressure on malls and shopping centers to bring exciting, new products to their customers has not only turned specialty retailing onto a $2 billion industry, but it has created a wealth of opportunities for enterprising individuals.

HOP ABOARD THE KIOSK BANDWAGON 

Running a pushcart or kiosk doesn't require prior retail or business experience. To open a cart or kiosk, you simply fill out a one- or two-page application, pay a fee and security deposit--about $350 total--and present a merchandising idea that the mall views as profitable.

Entering the specialty retail business is fairly easy and inexpensive; running a successful business is not. To help you make the entry into the pushcart or kiosk business, pay heed to these five points:

One: Assess yourself. Before you go running off to your local mall, take a personal inventory. Point blank: Do you have what it takes? Long hours and slow days can be discouraging. As long as the mall is open for business, your pushcart or kiosk must be accessible.

Although profits from the pushcart and kiosk business are undeniable, so are the challenges. Some industry observers point out that while holiday months can bring runaway sales, slow months can force vendors out of business.

Equally important, are you willing to adhere to strict guidelines and policies? Even though you are your own boss, you have very few rights as a pushcart owner, Smith notes. The mall can require a dress code. Also, there's no smoking, eating or reading at the cart or you'll have to pay a fine. And you face a penalty if you're late or leave your cart unstaffed at any time during the day. Smith and other retailers add that insuring against theft can be prohibitive, ranging anywhere from $300-$1,200 a month (this is in addition to property insurance paid to the mall).

"In this business, you have to be flexible," says Sandy Hubbard. "You need to be aware of their rules, and you have to be willing to play by them." Three years ago, Hubbard joined the specialty retailing program at Hilltop Mall in Richmond, California, which is managed by leasing company Sales Dynamic Inc. in Cherry Hill, New Jersey. With only $1,500 down, Sandy's Creations, a gift basket pushcart, grossed $2,500 in its first two weeks. Hubbard expects 1996 sales to reach $200,000.

Two: Choosing the right location. You need to closely examine where you want to sell your goods, whether in a local mall or nearby transportation hub. A bad site can wreak havoc on any retail business. Don't make the mistake of opening in a location because it's convenient to you and the rent is cheap.

Properly research a potential location and its demographics by doing a head count and asking solid questions of potential customers and other kiosks owners. When Nanna Turkson Peterson first opened her jewelry cart, Necessary Pieces, at Minnesota's Ridgedale Mall, she asked the person handling the specialty retail program how many jewelry stores were due to come into the mall. Initially, there were none, but Peterson says after her business started picking up, the mall owners brought in an inline jewelry store.

Geography is often the main thing that sends a vendor up the kiosk creek before getting their retail feet wet. "Seasonal or specialty items may only appeal to a particular location," notes Norins. "If you're specializing in something that sells in Michigan, that doesn't mean the same product would sell in Florida."

Visit the site at different times during the day and evening. Is foot traffic high? Are shoppers carrying bags, indicating that they're buying, or are they just browsing? A word to the wise: the mall determines where you can physically set down your pushcart, be it a bustling area or one that's dead. And remember this is a temporary gig. "You don't always know if you are going to be in business when your lease is up," says Smith, "because they may opt not to renew your license or they could even move you to a less desirable location to make way for someone new." Leases vary from mall to mall, but most range from six weeks to six months.

Three: Finding items that can sell. One veteran specialty retailer recalls a magic pen pushcart that made more than $100,000 in six months, while a pushcart selling irons closed almost the same day it opened. Small, inexpensive impulse items tend to sell well in crowded malls. Food carts and kiosks also do well. However, food carts are more difficult to handle and usually require licenses from the state health department.

Most malls will have some contacts in terms of distributors, and you can also buy an existing cart concept and supplies from companies such as the Herb Shop (800-280-9853, ext. 9767) and Peek-A-Boo Kid's Clothing (805-255-6416). But bear in mind that you're supposed to be bringing the mall and its customers new and exciting products. So, you have to cut solid deals with distributors and/or manufacturers for the items you want to sell.

Many cart owners cruise along streets paved with wholesale stores to buy their goods. You can also peruse the Mall St. Journal for a host of names as well as wholesale catalogs. Also, talk to other retailers selling similar products to find out who are their distributors. Note: new, used or refurbished carts are available through the mall's specialty retail program and are usually included in the rent.

Four: Negotiate the terms of the lease. Not all rules are etched in stone. You can negotiate for a better location or leasing costs. For instance, if your cart is in a low-traffic area, you may ask to pay cheaper rent than someone in a more crowded spot in the mall. If you move in January, you can negotiate for a more suitable spot after your lease is up in June.

Some industry insiders warn that some of the folks who run specialty retail programs can be tyrannical in their management style. In other words, some programs take too much of a cut from vendor profits, pay less attention to vendor needs than those of inline store owners and enforce rules that are burdensome on the business owner. And most require nearly 25% of the vendor's gross sales after a certain level, say, $25,000-plus. You may not always get what you want, but it's important to develop a rapport and working relationship with management.

Five: Take stock of inventory. Your success and survival will depend on inventory performance. Effectively managing your goods requires seasonal planning, profitable markups, minimal markdowns, cost-effective reorders and well-maintained turnovers.

While Peterson has been in the business full-time for six years, she has recently been operating her jewelry pushcart on a seasonal basis only (six months out of the year) because it's more profitable. "You have to do the numbers," she cautions those looking to break into the specialty retailing business. "If a pushcart vendor is paying $2,000 a month, he or she usually has to do $24,000 in monthly sales to net a substantial profit [figure in the cost for inventory and royalty fees]. While this may be feasible during Christmas months, it may not be doable during the off-season," adds the 38-year-old entrepreneur.

One cost many cart owners overlook is storage cost for inventory. One way to get around it is to plan for peak seasons and forecast sales. This way, you can purchase the necessary merchandise quantities and arrange to have it delivered to you accordingly. Of course, this means timing deliveries accurately. Late inventory can cause a loss in sales. Pay attention to customer purchases and trends that are reported in trade publications.

Another important point for those just entering the retail arena, and who are novices in business, is to seek support services and guidance from experts. Take advantage of business courses and training. The National Retail Federation offers educational seminars and puts out a directory of services (202-723-2849). And Sales Dynamic (609-482-7600) sponsors seminars and trade expositions throughout the year.

"Everyone is looking for the `hot' product, but the magic of pushcart entrepreneurship does not rest on that alone," says Norins. "You need friendly, helpful personnel, a visually appealing merchandise presentation, fair pricing, the right sales technique, the right location within the mall itself and a corresponding season for your product."

A STEPPING-STONE TO INLINE STORES

For someone who has no retail experience, a pushcart is a great learning ground, says Theodore Holloway, who believes more African Americans should consider the business. "Pushcarts are the stepping-stone and inline stores are the last frontier." Manageable rents, low overhead and intuitive business sense allowed the 31-year-old Holloway to grow his pushcart and kiosk businesses into an inline store.

Six years ago, Holloway, the owner of All City Sports Wear, plunked down $4,500 to operate a 4-ft.-x-6-ft. T-shirt cart at a mall in Philadelphia. Three months later, he had earned $12,000 in sales. By 1992, he had expanded to five T-shirt carts across the Washington, D.C., metropolitan area, with year-end revenues of $500,000.

Holloway, who started out without any retail experience, consolidated his businesses into two kiosks in 1994 to take advantage of larger space and bargain rents. By 1995, his monthly profit margins rose 20%. During that time, Holloway also expanded his product line and opened two stores in a mall in Maryland.

The key to success is to do extensive research, says Holloway. "You have to make sure you have a product that people want and can't get from just any local five-and-dime." This means staying ahead of the competition, he adds, explaining that many of the retail chains--with deep pockets and brand-name merchandise--are coming in and buying up pushcarts, which could squeeze profit margins from smaller merchants like himself.

Indeed, a number of franchise companies are selling kiosks to would-be business owners. Delilah Winder entered specialty retailing after spending the last 12 years building two successful soul food restaurants in Philadelphia. After attending an ice cream trade show in Atlantic City in 1994, she convinced a Dannon Yogurt representative to sell her the company's pushcart, which had been set up for decoration.

Winder sold officials at Philadelphia's International Airport and the city's minority business council on the idea, using a photograph of the cart and Dannon Yogurt's worldwide name recognition to back her up. Winder opened her cart last August, and has since grossed $6,000-$8,000 weekly.

Winder notes that the puschart offers some significant benefits over her restaurant business. "With the cart, labor is minimal, and you only need one or two people to operate it based on the volume," she explains. "You can kick out a higher sales volume in a cart with one or two people, while at my cafe, I have five people per location." Winder also points out that the start-up costs for her restaurants were between $180,000 and $200,000 each, while total costs for launching the cart was only $20,000.

Although she is no longer a pushcart owner, Adeena Smith is an advocate of the industry. Last year, she established the International Pushcart Owners Alliance (800-322-HATS), which has 12 members thus far and is free to join.

Now is the time for African Americans to capitalize on this booming niche and to leverage their merchandise into entrepreneurial opportunities, says Smith. Anyone looking to break into retail should view this as a temporary step to getting an inline store--and a cost-effective way to get their feet wet in the business. "In this country pushcarts are not always considered real businesses by African Americans," says Smith. "But in Africa, we were vending all of the time. It is a part of our heritage."