Like veterinarians tending the sick old family pet, Ahwatukee residents Rob Nelson and Chris McCarty often must put their client-businesses to sleep.
They’ve built a national reputation for their Ahwatukee-based business, POWER Retailing, on a sharp-eyed ability to help some failing businesses reorganize and usher others into oblivion.
One of their current clients is almost within walking distance of their homes. They’ve been presiding over the going-out-of-business sale for Plaza Hardware, whose longtime owner Leonard Branstetter, died earlier this year.
His widow and children decided to sell the business, unable to afford rising rent and/or compete with big-box operations like Home Depot.
So, they turned to Nelson, who founded POWER Retailing in 1984, and McCarty, who as vice president travels around the country helping businesses that are taking on water decide whether it’s best to swim or sink.
The two men do this through time-tested marketing tactics and strategies aimed at either increasing revenue or safely liquidating inventory and maximizing sales so the owner can walk away without losing the shirt of his back.
In a career covering both wholesale and retail, Nelson has seen countless numbers of businesses fold their tents – many times falling prey to big-box stores.
He recalls being told “we’re here to kill the little guy” by a Home Depot executive planning to move into a territory where independent hardware stores were thriving.
“They had a war room, like all these big chains do, and developed a strategy around the question ‘How do we get rid of this guy?’” Nelson recalled, musing:
“They killed the little guy and now the internet is killing the big guy. There’s just a dramatic change going on in retailing.”
When he was a member of another vanished breed – the traveling salesman – and represented a wholesale supplier back in the ’60s, he recalled, he serviced nine stores in Mesa and 16 in Sun City.
“They used to be very, very prosperous,” he said. “But once the big guys came in, they were gone eventually.”
As he saw the road representative going the way of the dodo, “the business was shrinking fast so I knew I had to do something.”
So, he and his wife started a store in Southern California.
But when that business started to sour, Nelson and his wife cut their losses and closed down.
That’s when he decided he had enough background to help other troubled businesses call it quits.
“I told them, ‘I can help you, and they said do it, and I did it.’ Then my wife and I moved in 1992 to Arizona. It’s been great, like going to a half-price sale: We can have a great neighborhood and everything else for about half what we would pay in California.”
Nelson said he is in a highly competitive business: “Everybody who loses their job becomes a consultant. When I was first in the business, people called and said, ‘Get out here as soon as you can.’ Now they say, ‘I gotta talk to five other people.’”
But Nelson and McCarty believe their experience in the psychology of closing down businesses gives them an edge.
For example, Nelson sees a certain magic in the marketplace where “Going Out of Business” signs are concerned.
“Customers always respond to a going-out-of-business sale; they all show up for the funeral,” he said. “Go to the mall and see a sign saying 50 percent off and who cares? People say to themselves, ‘I’ll come back later.’ But when you say, ‘Everything must go,’ everyone shows up.”
In some cases, POWER Retailing has helped fading businesses go out with a blaze of glory – as it did with one boutique that normally had done $2,000 to $3,000 a day in business and did $14,000 in the first two days of a going-out sale.
In a Montana town where the unemployment rate hovered around 15 percent and the town’s major employer, a paper mill, was closing, Nelson and McCarty helped an independent outdoor-goods store close down when its owner decided to retire.
“He did $175,000 on the opening day of his going-out-of-business sale,” Nelson said.
Despite competition from larger price-cutting stores, many independent businesses that Nelson and McCarty help are facing extinction because of poor management.
“Some people will fight the battle until they lose their homes,” he said. “When they call me and say the economy is bad, I don’t get into any discussion about that. I say, ‘Go to Costco. There doesn’t seem to be a bad economy there.’”
Many times, they provide not just financial advice but emotional comfort.
A business owner in Colorado told Nelson, “Not only have you been my consultant; you’ve been my psychiatrist. Not only does this affect my business, but it affects my life.”
But sometimes clients feel they didn’t get enough advice.
After helping one business owner mount a going-out-of-business sale, Nelson recalled getting an angry call from her.
“She said, ‘You didn’t tell me it would really change me. You’re the pro. I couldn’t sleep. There was too much going on,’" Nelson said.
“She’s mad because the store’s in shambles and she gets all this business all of a sudden. Actually, we do tell them, ‘Here’s how it’s going to happen. Here’s what you have to prepare yourself for. But sometimes they don’t believe you.”