A Texas family aims to turn its junk dealership into the next great American lifestyle brand.
(FORTUNE Small Business) – It's a problem most entrepreneurs would pray for: The Junk Gypsies have been blindsided by success. Their quirky little family business--reselling oddball clothes and furnishings that they find at remote flea markets--has suddenly turned the three Texans into celebrities.
To their surprise, Amie, Jolie, and Janie Sikes are swarmed by fans when they arrive at swap meets. The funky jewelry and sassy T-shirts that they recently started making (to supplement the vintage products they peddle) are showing up on entertainers such as Sheryl Crow and Minnie Driver. And major apparel chains are dangling big bucks for the right to mass-market their designs.
The Gypsies should be giddy with delight. Instead they are overwhelmed by their choices and fearful of striking deals with unscrupulous suitors. Amie, 32, Jolie, 29, and their mother, Janie, 58, are determined to turn their cult following into a substantial and long-lasting business.
"It's crazy," says Amie, who started the business six years ago after quitting her job as a legislative aide in Austin. "We don't know if we want to do wholesale, retail, emphasize our website (gypsyville.com), specialize in T-shirts, or junk, or clothing, or jewelry, or what."
When Amie contacted FSB for a makeover for the Junk Gypsy Co., we found her problem intriguing but a head scratcher. Essentially, the Gypsies want to grow their underground business into a national lifestyle brand, akin to Banana Republic, Martha Stewart, or Restoration Hardware. But how to get from here to there? The first consultant we turned to was Dan Levy, a former management consultant at Booz Allen Hamilton and Scient, whose broad interests in music, culture, and technology now have him designing and running websites for some of the world's top recording artists. We also recruited Fred Burt, senior director for client services for Interbrand, a firm based in New York City and London that helps companies fine-tune their product branding and corporate image. Not least, we snagged Patricia Ziegler, co-founder of the Banana Republic chain.
When the Junk Gypsies aren't scouring the South and Southwest for castoff treasures, they occupy a ware-house on the edge of College Station, Texas, a small university town where Amie and Jolie went to school. It's crammed with the accumulation of 1,000 road trips: stuffed animal heads, drum majorette hats, jukeboxes, petticoats, jewelry, giant be-spangled columns that once decorated a Mexican restaurant in Dallas, and much, much more.
Levy, 46, a big, solidly built guy wearing green glasses with translucent frames, a black-and-white tattersall shirt, and dungarees, spent more than a day with the Gypsies, perched on one of their charmingly uncomfortable chairs at a bright-red table in their office and later wolfing down smoked ribs with them at a nearby restaurant.
"I have a problem with the website," Levy says at one point. That simple comment strikes at the heart of the Junk Gypsy dilemma. Like the warehouse and, indeed, the Gypsies themselves, the site is an offbeat, funky experience, starting with the slogan "Well-behaved women rarely make history" and continuing through pages of road diaries, photo albums, and if you look really hard, products for sale. But it's not clear whether the purpose of the site is to sell merchandise or simply celebrate the joys of the open road.
This carefree eclecticism is part of the site's charm and shouldn't be changed too much, Levy says. But there are ways to sharpen the business message without sacrificing the adventurous spirit that attracts customers to the site in the first place. He praises the Gypsies for printing their URL on every T-shirt they make. "That's a great way to help new people find you," he says. Once customers reach the site, numerous shareware programs can change the contents of the home page every few minutes, intriguing repeat visitors with a constantly changing mix of poetry, pictures, and stuff for sale. The Gypsies should also improve the site's search function so that it helps customers find exactly the items (T-shirts, jewelry, furniture) they're looking for.
When Amie talks about wanting to raise the company's public profile, Levy suggests that they come up with a line of Gypsy colors, complete with novel names, that could be licensed to companies that make paint or bath towels. They might also create a magazine that defines the raffish, bohemian Gypsy world in much the way that Martha Stewart Living magazine defined affluent suburban domesticity. "Call yourselves designers," Levy urges. "They don't have to exclude anything."
Fred Burt of Interbrand also prepared for his consultation by studying the Gypsyville website. He starts off a telephone conversation by saying that he's impressed with their passion and personality. But he urges the Gypsies to position themselves toward the higher end of the fashion spectrum. "Don't rule out something as outrageous as a $300 T-shirt," he says. "It positions you as upmarket. The customer says 'I can't spend $300 on a T-shirt, but I'll buy something cheaper and dream."
The Gypsies have already gleaned priceless free publicity from celebrities such as the actress Minnie Driver, who recently showed up at a party in Nashville wearing one of their KISS MY GRITS T-shirts. (At the same party, Carson Kressley of Bravo's Queer Eye for the Straight Guy mugged in a REBEL ROAD SISTA baseball cap, also from the Gypsies.) If the Gypsies create a more exclusive line of high-priced apparel, they can lend the clothes to fashion photographers, who will expand awareness of the brand by putting it on models. Once the upscale Gypsy brand is well established, they can license a similar but less expensive brand to mass-market retailers.
But the Gypsies have a fine line to tread: The more mass-market they become, the more they risk alienating their best customers: quirky, individualistic young female shoppers who turn to Junk Gypsy in part because they like its aura of underground exclusivity. TV ads are a particularly good way to alienate 20-ish consumers who have grown up in a world dominated by slick Madison Avenue product pitches. Instead, Burt suggests that the Gypsies pitch their wares to fashion and culture websites, such as Trend Central and LiquidTreat, that cover new design trends for their hip, fashion-forward young audiences. These customers "don't buy into Starbucks," Burt says. "They want to stumble onto things that are right for them."
A few days later Amie and Jolie are on tiptoe at the College Station airport, trying to guess what the legendary founder of Banana Republic looks like. They know her only by reputation: Patricia Ziegler and her husband, Mel , traveled the world as international journalists and brought exotic apparel and accessories back from their trips. In the 1970s they began selling their wares at flea markets around San Francisco. They eventually started Banana Republic as a mail-order business, and finally opened a wildly popular chain of stores that they later sold to Gap.
Suddenly a teeny-waisted blond in her 50s appears, wearing tight white pants and dark sunglasses. Patricia Ziegler eyes Amie's big, bold necklace and smiles broadly. "You must be the Gypsies," she declares.
Everyone piles into the Gypsies' colossal SUV. They are barely out of the parking lot when Jolie tells Ziegler that the Gypsies are thinking about vastly expanding their production of T-shirts. "We're trying to find manufacturers, but we don't know how to go about it. We don't know who to trust."
"You should be concerned about that," Ziegler answers drily. Once they reach the warehouse, she instantly zeroes in on the Gypsy business model. "Where's your heart?" she asks. "Do you want to do a smart, catchy, high-volume brand for Sears and Target? Or do you want to do a boutique business?"
Amie answers without hesitation. "We'd prefer the latter," she says. Good answer: Ziegler is pleased. "If you license your work to big manufacturers, they'll just flood the market," she tells them. "In six months your stuff will be remaindered, and you'll be all over."
Now that the Gypsies have figured out what they really want to do, Ziegler starts talking shop. Beware of becoming a T-shirt company, she warns. "T-shirts nearly ruined [Banana Republic]," she says. Even at a stiff markup, T's don't generate enough sales per customer. Also, successful shirts inevitably get knocked off. "There are so many piranhas out there!" she exclaims. Instead she urges the Gypsies to create signature items, like a classic hat or sweater, that transcend fashion trends but stay current with simple changes in color or trim.
Ziegler frowns when she hears that average sales per order on the Gypsyville website are only about $70. "You can't grow at that price point," she says. "You need to find other items you can sell for more money." One good way to push up the total price per order, she says, is to market ensembles: Yes, a T-shirt, but a bracelet and a jacket too. Avoid items such as jeans, which are often returned because they don't fit properly.
When Amie mentions that she's been thinking about designing a new line of leather jackets, Ziegler gets excited. "A stadium jacket! Hot pink! So great!" she gushes, offering to hook them up with leather manufacturers in Italy.
What if tastes change, and, say, the colors the Gypsies have favored fall out of fashion? Not a problem, says Ziegler: The Gypsies should only sell what genuinely appeals to them. Amie reveals that she's tired of the hot-pink shade that has been one of their signature colors for a long time. "Don't be reluctant to come up with something else," Ziegler replies. "If you're tired of it now, your customers will be tired of it in six months."
And when Amie admits that she "hates" a bestselling pink rhinestone belt that was suggested by a supplier, Ziegler tells her to get rid of it. "Only sell what you believe in," she says. "If you simply follow what sells, you won't have a brand."
Ziegler urges the Gypsies to avoid excess publicity--such as the fashion press or a television feature--until they are better equipped to handle it. "That will bring an onslaught of orders that you just can't fulfill," she warns. "And if you don't deliver the first time around, you've lost the customer forever."
And finally, Ziegler tells the Gypsies how to reach more customers without compromising their unique brand. They should open a single brick-and-mortar store and use it as a laboratory, tweaking the products and store design in response to customers. At that point they can take on some investors and open four or five more stores. "Eventually the malls will come to you," she concludes.
Did the consultants help? Yes, says Amie a few weeks later. The Gypsies have already fine-tuned their website based on advice from Levy and Burt. The Gypsies had been on the verge of signing a big contract with a T-shirt maker, but they dropped that plan after Ziegler's visit. "We always wanted to open a store of our own but were afraid to actually do it," Amie adds. "Patricia really helped us think it through."
The Gypsies hope to open their first physical store in Austin next year. We will keep an eye on them and report back on their progress. In the meantime, we'll be wearing our REBEL ROAD SISTA caps around the office.