I got a message from Nina Phalen last week that she would soon close her store, Style of Civilization, on the 100 block, I was surprised. I knew she’d gone on a purchasing trip for her spring line-up of shoes recently and I assumed that all was well. When I pitched the idea of an interview to discuss the closure of her business, I wasn’t sure what reaction I would get. It seemed to be a potentially difficult subject for her so soon after making the decision. I was wrong. She welcomed the opportunity.
I asked her to remind me how she and her husband Ed came to be in Knoxville. She said he got a job in Alcoa and came before her to the city, placing a down payment on a home before she’d ever visited. Never having been to Knoxville, she arrived in 2012 on the day of the International Biscuit Festival. The weather was beautiful, the crowds festive and, being ready for something different from Philadelphia where she’d lived for the previous ten years, it seemed perfect.
While she’d never owned a business in the past, she’d worked retail. As a teenager she worked for a privately owned shoe store in Washington, DC and she drew inspiration from the women who owned it. In Philadelphia she worked at a women’s clothing boutique. She knew when she arrived in Knoxville that she wanted to operate her own retail business.
She and Ed liked the look of the 100 block, feeling it was an up-and-coming area. After examining what was and was not available downtown, she saw a need for women’s fashion, particularly shoes. She developed a business plan, something she calls critical for any new business, and opened her doors. She calculated that if 1% of the women in Knox County shopped at her store, she would be very successful.
Her goal from the outset was to offer a “cool experience,” noting she “never liked messy, cluttered store where you have to help yourself and customer service is bad. I believed that creating an experience that was cool and funky while offering quality merchandise at a reasonable price would be enough.” In the end, it wasn’t.
She was surprised by the amount of work not related to the shoes and accessories she sold. She learned to contract it out. She was surprised by some attitudes she saw, such as women who would stop, look at her sign outside and look through the windows, but wouldn’t enter. She heard comments implying that they could not afford such a shop even though they hadn’t seen the prices.
Noting that she’s always loved places she can abandon her car and walk, she wonders if many people locally have a different mindset and, so, miss a store like hers. If people drive to the spot they want to visit and then drive away, there is little chance to notice small shops. Given that downtown is so walkable, as a contrast to shopping out west, she’s been surprised at the small number of people simply exploring the sidewalks.
She points out that some of her best business came from visitors to the city, though that wasn’t enough to completely support the business. She feels we need to market the city more to bring in out of town visitors. She noted that she’d heard from many visitors how successful such a shop would be in their cities of origin.
In direct terms she described a difficult first year. She’s about at the one year point now and she had orders placed for more inventory, but after looking at the current inventory and at the fact that business had not increased as she’d expected, she felt it was time to stop the losses. Her business plan was helpful in this way: it provided a black and white record of her projections. She couldn’t deny the diverging lines of projections and reality. Her best periods were when she discounted her shoes, but the profit margin wasn’t enough to sustain her.
She felt from the outset that her primary competitors were online sites. She carried brands not available elsewhere in Knoxville and made sure her prices were competitive with online prices. She thought, given that, that women would chose a personal experience. She’s not sure why that didn’t prove true. She does wonder if downtown retail hasn’t hit enough critical mass to increase a particular business’ likelihood of success. I observed that on the 100 block there aren’t many other businesses where one might browse. Offices, restaurants and art galleries dominate the block. The other retail businesses aren’t store-front based and, thus, are not always open.
I asked her if she planned to pursue other retail businesses. She didn’t hesitate to say, “no.” She has a bachelor’s degree in psychology from Temple University and she plans to return to school to earn an M.BA. It was the finance portion of the business that most overwhelmed and surprised her and she’d like to gain the knowledge she was missing and, perhaps, use that to consult with small businesses.
It was that lack of information about graphic design, book keeping and other financial issues that she thinks hurt her from the outset. Curiously, she is financially conservative in her personal finances and carried that over to the business to its detriment, she feels. She says if she had it to do again she would have spent more money upfront to let people know she was there.
One very significant insight she gained as she worked on the business for the last year was the importance of separating herself from the business. At first she saw the success or failure of the business in personal terms, but in learning to separate the two, she was able to more objectively determine how well the business was succeeding and to make dispassionate decisions like the one to close the doors. For this reason, she says she is not emotionally devastated or sad that the business failed. She is disappointed, but ready to move forward and has already begun that process.
I asked her what advice she would have to give to someone starting a business and, after initially balking, she said she would encourage them to think very carefully about location, write a business plan and “go all in.”
It remains a bit of a puzzle to me why the 100 block has not thrived to a greater degree since the extensive renovations were completed a few years ago. We talked about the separation from the main body of downtown last week – and I do feel that if there was a 200 block the 100 block would do better. There is the limited retail business on the block. Yet, that portion of downtown has the highest residential concentration and that should help. The three current restaurants on the block seem to be doing well, but three before them did not. It remains a bit of a mystery. For now, the only thing certain is that another business will be gone by the end of this week.
