Dick Enrico opened a new retail venture called 2nd Shade Patio Furniture in Minnetonka two years ago and said, "If it fails, I'll pick up my marbles and go another way."
Now he's collecting his steelies, swirlies and aggies. And 2nd Shade is holding a "Shifting Gears" liquidation sale.
"Patio furniture was a misstep. I have enough humility to admit when I'm wrong, I'm wrong. I underestimated the short seasonality and the competition," said Enrico, the tan, mustachioed serial entrepreneur known best for his 2nd Wind used-furniture chain and its ubiquitous TV commercials.
"I started 2nd Wind with $15,000 and I spent millions in patio furniture," he said. "Sometimes it can be a disadvantage to be adequately financed."
At 79, Enrico has succeeded or failed at nearly 25 businesses and plans to pivot without missing a beat.
He's already got a new venture called Shady Deal Depot, still playing off his Italian "Godfather" heritage. "Why buy new when gentle returns will do?" is his new slogan tweaked from the 2nd Wind's immortal "Why buy new when slightly used will do?"
With liquidation stores, Enrico joins the rising industry that deals with the massive amount of products that are returned to online retailers and, to a lesser extent, brick and mortar stores. It's a byproduct of a change in consumption wrought by online sales: Millions of people buy items in multiple colors and sizes, then return the ones that don't work.
Enrico buys from local suppliers who purchase customer returns and overstocks from Costco, Target, Walmart, Sam's Club, Wayfair, HomeGoods, Marshalls and J.C. Penney.
He opened the first Shady Deal store in New Hope four months ago. A second location in Mounds View, in the former DealSmart location, is also open but remodeling. By October, he'll have converted a 2nd Shade location in Minnetonka to the Shady Deal concept.
Two to three additional stores are on deck for next year. "I can see eight to 10 stores in Minnesota, easy," said Enrico, who at one time had 18 2nd Wind stores in Minnesota.
He's immersing himself in an enterprise that appears to have an unlimited supply of retail returns and overstocks. It's a $600 billion U.S. business that has doubled in the past decade.
With rocket-like growth since the dawn of internet retail, the supply of returned goods increases about 20% each year. Brick and mortar retailers typically get 8 to 10% of their sales returned, but online companies see 25 to 40% returned, said Scott Armstrong, CEO of Jacobs Trading Co., a Hopkins-based major player in liquidations.
Enrico has plenty of local liquidation suppliers — which are also known as reverse logistics companies — to feed his stores. They include Jacobs Trading Co., Event Sales and Libra in Minneapolis, Value Merchandise International in Plymouth, Sky Group Wholesale Liquidators in St. Paul and Return Deals Inc. of Golden Valley.
Nearly all have opened liquidation stores of their own, but they keep themselves low-key to avoid offending retailers that sell them their returns and overstocks, usually for about 10 to 25% of full retail price. Enrico wants no part of staying low-key, but to maintain relationships he won't mention specific retailers in his promotions.
Reselling thrives in parts of California, Texas and the South with flea markets, resale and salvage stores, but it has an uneven history in the Twin Cities.
The market has more than a dozen small liquidation retail stores open now. But that's a fraction of the number of stores open during and after the 1990s when scores of COMB (Closeout Merchandise Buyers), Petters, Only Deals, Brand Name Deals and Banks stores were scattered around the metro. More recently, major liquidators in the Twin Cities have closed all but one of their retail locations.
June Peterson of Plymouth checked out the New Hope Shady Deal Depot for the first time last Wednesday. "The selection is good but the prices are hit-and-miss," she said.
Esi Sibley of New Hope hunts for deals about three times a week at the store. She's purchased drinking glasses, dinnerware and a microwave. "The place is clean and nice-looking, and I save up to 40% over the discount stores," she said.
About 50% of the New Hope store is stocked with furniture, such as sofas, sectionals, tables, mattresses, vanities, rugs and patio furniture on clearance. Other departments include health and beauty, small appliances, apparel, shoes, cookware, tools and paper goods.
Retailers who sell liquidation often have to bid blindly on goods that may be sold by the semitrailer truckload or the pallet. A local supplier recently sold Enrico a semi load of returns from Amazon. One pallet contained two 55-gallon empty drums that Enrico ended up having to pay someone to haul away. "Did they hustle me?" Enrico asked. "Well, I didn't call [Jeff] Bezos. That's part of the game."
He wants to remake liquidation retail into stores that look more like a first-run discounter with good lighting and signage, a formal return policy, ample dressing rooms, clearly defined departments and clean restrooms.
By skimping on those features, Enrico said, "Twin Cities liquidation stores haven't seen the growth that they should have. My stores will be clean and well-organized."
Matt McConville, co-founder and co-owner of Sky Group Wholesale in St. Paul, thinks that the Twin Cities market is ripe for more liquidation retail stores. "It's hip to go thrifting these days, and there are a lot of vacancies in malls," he said. "Dick is a marketing genius who knows how to get people in the door."
In the past, many thought liquidation stores sputtered in a strong economy and strengthened in a recession. That hasn't been the case in the past decade. "There is no shortage of people looking for a deal," Armstrong said. "Whether it's a damaged box or a discontinued item, people want to save money in any economy."
Bob Bushey, who has run DealSmart in Mounds View for the past 11 years until Enrico took it over last week, believes that Enrico's modernization of the concept will be a big improvement. "He has a really strong presentation," he said. "People like to buy deals but also be proud of where they're buying them. He'll make this place shine."
Bushey, who is retiring after a short transition with Shady Deal Depot, shared some of his best strategies for getting customers to shop more often. He brought in grocery items priced below market, such as Brownberry bread for $1.19 a loaf (reg. $3 and up), Bernatello's 12-inch Brewpub pizza for $5.99 and 10- and 12-ounce bags of Cameron's coffee for $4.88, down from $7.
"People come in for the bread and pizza and walk away with a comforter or a piece of furniture too," Bushey said.
Enrico said he will continue those deals at his stores. By offering furniture and bigger-ticket items along with everyday staples, Enrico said he'll try to entice consumers to double or triple the amount spent per transaction. Many of the home furnishings are from Costco and Wayfair, which has a returns center in Blaine.
Enrico said his only apprehension in the new venture is hiring the right people to make it work. "You gotta have a hustler behind the scenes who sees the opportunity," he said. "Nobody will market this business like I will."
His liquidation suppliers hope he's right.
"Someone like Dick who hasn't been in this business can flip it and turn it on its ear," Armstrong said. "He'll give it 110% and we'll all sit back and watch."
John Ewoldt • 612-673-7633
