It's How We Play the Game

by Ed Stack

  I chuckled a little. “Yeah,” I admitted, “they’re pretty ugly. That’s why we marked them down.” I pointed across the store. “Let me show you some other things over here.”

  I took a few steps that way and noticed she wasn’t following. She was still at the table, and as I watched she picked up a sweater, gave it a close, disapproving once-over, then said: “On second thought, I’ll take this. My sister-in-law is the biggest bitch I’ve ever known.”

  It always feels good to help a customer find just what she’s looking for. I rang her up, and off she went. Merry Christmas!

  CHAPTER 8 “THEY’RE REALLY NOT QUITE AS SMART AS THEY THINK THEY ARE”

  I’d worked for Dick’s for seventeen years when we took control of the company. I’d worked full-time in the stores for eight years and had led the business in my dad’s lengthening absences for six. So I’d had an unusually long apprenticeship, which had versed me in virtually every aspect of running a small retail operation.

  But when I turned thirty, I woke up feeling old and worthless. All those years of work hadn’t taken me to where I wanted to be. My twenties had been a blur of lookalike days—walking into the Court Street store at eight fifteen a.m., closing up at nine, counting cash deposits and loading up the night deposit bag, and finally getting home at ten. I got to spend only a couple of hours with Denise before we’d have to turn in so that I could get up to do it again. It felt as if my life were passing me by. I was on the shot clock. And one action I felt a pressing need to take was to push the business beyond Binghamton.

  I didn’t know a thing about growing the much bigger company I wanted Dick’s to become. I knew I needed advice on how to do that—my only experience in running a bigger and expanding chain of stores was that I’d imagined it happening and argued a thousand times about it with my dad. So among my first executive decisions as the new president of Dick’s was to assemble a board of directors.

  Its members wouldn’t actually have a vote in the management of the company; they’d serve strictly as a source of advice. I wanted people whom I trusted and admired, who were smart and strategic in their thinking. So I chose Larry Schorr, the young lawyer who’d put together the buyout. Larry and I were beginning what has proven to be a long and wonderful friendship. He’s been my confidant and my trusted adviser, and he’s been instrumental in helping me and Dick’s get out of tight spots for thirty-five years.

  Another guy I asked to be on the board was Monty Pinker, one of my closest friends, who ran three TV stations in the region and had a deep background in advertising and marketing. I also asked my uncle Joe, my dad’s brother, a really smart guy who’d owned a couple of businesses that did very well; one of them, Chenango Industries, assembled electronic components for IBM. And I asked Charlie Murray, the president of Endicott Johnson. I didn’t know him well but felt he’d lend the board gravitas.

  Finally, I asked Tim Myers, who knew me about as well as anybody, and who, now that he was part of the family as well as the company, was as invested in our success as I was. From their first quarterly meeting, the board members were a huge help to me. They talked me out of a lot of bad ideas. They encouraged me in my good ones. They were always generous with their time and frank in their views.

  My dad served as an adviser, too. His standard advice, no matter the question, was “Don’t do it.” And the one ambition of mine that scared him the most was opening new stores. He remained convinced that any new venture would fail, which would not only wipe out the company but end his retirement before he’d learned to relax. His age-old nightmare of going broke would come to pass.

  Sometimes he offered concrete arguments against proceeding. “You don’t have the capital to expand,” he’d tell me. “You don’t have the systems.” Now and then he’d deliver his advice as if he thought he was still the boss. “As long as that’s my name on the front of the building,” he said many times, “I can do as I damn well please.” As often as not, he pleaded. “It’s too risky,” he’d tell me. “You should enjoy what you have. It was good for me; it should be good for you.” And: “Rome wasn’t built in a day. Cool your jets, Eddie.”

  But I was committed to the idea of expansion. I was thirty. I was convinced we should be further along. The board backed the idea of opening a third store. My stepmom, Donna, calmed my dad down as much as she could.

  * * *

  Syracuse. The first store outside of Binghamton, Tim and I decided, would be in Syracuse—three times the size of Binghamton, with a major university, a lot of hunters and fishermen, and heavy snow every winter, all of which promised to be good for us. Tim Myers and I drove the seventy miles up to Syracuse one Sunday to have a look around. We saw a bunch of real estate signs on open properties, all advertising the same broker, which is how we met Mary Claire Cod. She took us to Erie Boulevard East, where a piece of property was for sale near the big ShoppingTown Mall.

  We looked at the property, eyed its proximity to the mall, and said, “Yeah, that looks great. We could build a store here.” We had no idea what we were doing. We didn’t know what this store would look like or how big it would be. We knew nothing about the economics of expansion and whether it made more sense to buy or lease. But we were excited by this tangible piece of the puzzle, this weedy plot, and before you knew it, we’d signed some papers.

  Tim and I were driving home when he looked over at me and said, “Did we just buy a piece of land?”

  Suddenly I was horrified. “I think we did,” I said.

  “What are we going to do with it?”

  With deepening buyer’s remorse, I answered, “I don’t really know.”

  Over the course of the drive, we asked each other several times, “What are we doing?” By the time we got home we’d worked ourselves into a panic. We’d gotten way out ahead of ourselves. We needed to figure out what we’d build in Syracuse before we picked out where we’d put it—how big it should be, what we’d put in it, what its economics would look like. We called Mary Claire and told her we couldn’t do the deal. We needed time to figure things out.

  She was wonderful. “I understand,” she told us. “No problem.”

  We thus dodged a bullet that could have undone us before we even got started. Later, when we were a little better educated, we took another trip up there. A strip shopping center was under construction off Erie Boulevard, not far from the place we’d nearly bought. Its anchor, a big Hechinger home improvement store, was taking shape, and work was under way on a lot of smaller shops. We talked to the folks developing the center, and they said they’d let us put a twenty-thousand-square-foot store there. Larry Schorr handled the lease negotiations and contracts.

  With that, we figured we were in business. We had detailed plans for the store’s interior, which would be unlike any sporting goods store anywhere: departments arranged almost like standalone boutiques, and a traffic pattern designed to encourage shoppers through all of them. A profusion of eye-grabbing displays on columns and slat walls—ball gloves, canoes, ski jackets, football gear—so that the second you stepped in you were dazzled by the variety of cool stuff we had for sale. We’d hired a designer to put it together and spent a lot of time working with him on it so that it maximized flexibility. With the change of seasons, we’d be able to easily move the departments around.

  We handed off the plans to the shopping center’s developer and waited with excitement for the store to take form. And waited. And we’d be waiting still, except that we had a conversation with the contractor handling the construction, which at that point consisted of the store’s exterior walls and utilities. When we asked about his timetable for laying the tile floor and carpet, and putting up the slat walls, he squinted at us. “What are you talking about?” It turned out that he wasn’t going to do any of that. He was contracted to provide us with an empty shell—a “vanilla box.”

  “Wait,” we said. “You guys were supposed to build us a store.”

  “Yeah,” he said. “We’re building y
ou a vanilla box.” All of the interior was our responsibility. Not only did we not have anyone on deck to build out the place, we hadn’t ordered any of the slat walls, fittings, lights, shelving, and a million other components of the store we’d envisioned. We were due to open in a matter of weeks.

  He saved us. He had us order the fittings, and he agreed to do the construction. He was up front that the job would run into more money, because the work had not been in our contract, so it cost us. I suspect he gouged us a bit, but he proved to be worth every penny, because he finished on time and the store looked beautiful. I firmly believe that you learn more from your mistakes than you do from your successes, and that first store in Syracuse is a prime example. We were pretty damn well educated in how to open a store after that, and especially how not to do it. We’d narrowly avoided disaster.

  * * *

  My dad, meanwhile, remained vociferously opposed to this new adventure. While our work on the Syracuse store raced along, he woke one morning feeling sick and drove himself to see Dr. Peter Zayac, who’d saved his life years before. He’d made no changes in his habits after that close call—he still smoked dozens of Pall Malls a day, drank far too much, and continued to eat poorly.

  A nurse at Dr. Zayac’s office looked him over. His skin was the color of cigarette ash, and his belly was distended. You need to get to the hospital, she told him. With that, he passed out. A short time later, in the emergency room, doctors discovered that his bypass had blown out, and he was gushing blood internally. Fortunately, the hardware from the bypass had lodged in a muscle in his back, which, as I understand it, blocked some of the flow. Had that not happened, he would have bled out on the drive to the doctor’s office.

  Kim, Marty, and I raced to the hospital. We weren’t allowed to see him, but from a room away we could hear my dad screaming in pain. It was a shocking sound, bloodcurdling, and it scared the hell out of all of us. They rushed him into surgery.

  It lasted more than twelve hours. We knew a lot of people at the hospital, and they told us later that a bed had been prepared for him in Intensive Care but that nobody in the operating room thought he’d need it. But stubborn as always, Dick Stack survived the operation. When I went in to see him the next day, he was connected to a spray of tubes and so pumped full of fluids he looked like he weighed three hundred pounds. I thought for a moment I’d walked into the wrong room. He was unconscious for the next forty-eight hours. When he came around and was able to talk, he grabbed my arm. “You finky kids,” he rasped. “I can’t believe what you’ve done.”

  “Why? What have we done?” I asked.

  “You bought this hospital,” he said. “Why the hell did you do that? We don’t need a hospital.”

  “We didn’t buy the hospital,” I told him, fighting the urge to laugh.

  “Yes, you did,” he said. “And you shouldn’t have. We don’t need a damn hospital.”

  For the record, we didn’t buy the hospital. We had our hands full running a sporting goods business, thank you. When my dad was still hospitalized but feeling a little better, he called over to Court Street. A young manager answered the phone. “Listen, it’s Dick,” my dad said. “I want you to go to Cortese’s and get me an order of spaghetti, and go to the store and get me a carton of Pall Malls.”

  The manager was paralyzed. He called Jay Mininger. “I’m screwed,” he told him. “I don’t know what to do. If I don’t take him the Pall Malls, Dick will fire me. If I do take them, Ed will fire me.”

  I heard about the request before the manager had to worry for long. My dad might have gotten his Pall Malls, but he didn’t get them from anyone at Dick’s.

  * * *

  Despite all of our missteps, the opening in Syracuse was a great success. We moved people up from Binghamton to manage the store, among them my sister Nancy, and ran help-wanted ads in the Syracuse paper to fill out the staff—we set up a table in the place as the construction crews hurried to finish their work, and hundreds of people lined up to apply.

  Our advertising campaign started weeks beforehand. The first newspaper ads we took out read simply: “The biggest sporting event in Syracuse starts on August 3.” That got people talking around town. In later ads, we revealed little by little what was coming. We did a soft opening, for which we unlocked the doors, welcomed customers, and had everyone in place but didn’t announce we were open—just to get everything running smoothly. Then came the grand opening.

  The response was overwhelming. We had reps from a lot of the major sports brands there, and even they were shocked by the crowds that pushed into the new Dick’s that day. My dad had recovered enough to attend with Donna and the rest of the family. Tim and Donna had to skim the registers and take piles of cash in a bag to Nancy’s apartment, just to have somewhere safe to put all the money we took in. It was crazy.

  About a year later, Dad was recovering from an illness, and I was trying to get him out of the house. We were having a meeting in Syracuse with Nike, and after a lot of negotiation I got him to agree to come with me. By this time, the store was well on the way to doing $8.3 million in sales in its first year. We’d knocked the cover off the ball. With that one opening, we doubled the size of the company.

  We got to the store and were exchanging pleasantries with Gary DeStefano, Nike’s regional manager, when Gary turned to my dad. “Dick, you must be really proud of these kids,” he said. “The store looks fantastic. They’ve done such a great job.”

  My dad nodded. “The store looks great. They’re doing a great job,” he said. “But these kids did twenty-five percent more business than they thought they would. So you know what? They’re really not quite as smart as they think they are.”

  I took it as a compliment.

  * * *

  That first Syracuse store was a comfortable leap for us because it was little more than an hour’s drive from Court Street. I went up there a couple of times a week to check on the operation and make sure the team there had everything it needed. Shuttling merchandise between Binghamton and Syracuse was easy and fast on Interstate 81. The new store’s operation went so smoothly that we almost immediately thought about opening a second store up that way. The site we chose this time was on the north side of town, twelve miles from the first store. We were excited. We expected it would do every bit as well as the first had, that between them we’d be racking up more than $16 million in sales.

  But again, we were new to the business of running multiple locations, and while the construction of the second Syracuse store went off without a hitch, its operation still brought surprises because there was much we had yet to learn. We opened in 1988, and at the end of the year hadn’t pulled in $8.3 million—the new store did about $7 million, and what’s more, sales at the first store sagged to about $8 million. Now, by just about any yardstick, those were incredible numbers, but they weren’t what we’d projected, and the reason is a phenomenon that retailers call cannibalization. With one Dick’s in town, our customers came from all over Syracuse—north of town, the west side, down south. They came from many miles away to reach that one store on the east side of the city.

  With a second store, a lot of the customers who’d faced a long drive to reach us had a store closer by, and their business peeled away from the original location in favor of the new place. We drew a lot of customers we’d never had before to that second store, but we also cannibalized the first store for some of that business. It taught us that when we located multiple stores in the same market, one plus one didn’t necessarily equal two—it might instead equal 1.75. Expensive lesson. From then on, we knew we had to be incredibly careful about where we located, to minimize the impact of one store on another.

  Even so, the two Syracuse stores were wildly profitable, enough so that we were eager to expand into a new market. We set our sights on Rochester, an even bigger city about eighty miles west of Syracuse, on the shore of Lake Ontario—another town with lots of college students, an active population, and a ton of snow, all plu
ses for Dick’s. I knew Rochester from my college years and couldn’t wait to open there. A local car dealer was building a shopping center anchored by a Toys “R” Us, directly across the street from the big Marketplace Mall in Henrietta, and it looked to be a good spot for us. We told him we thought we could do $8 million in sales in his plaza, and after reviewing our tax returns and sales at our Syracuse stores, he welcomed us in.

  By now, building out a store was almost routine. We went a little bigger, at twenty-five thousand square feet, but the construction and build-out went smoothly and when we opened, people just crammed the aisles, wowed by all they found inside—which included, to their disbelief, a driving range where they could test golf clubs before buying them. The store took off like a rocket. We did $10.3 million in sales in our first year.

  It was in the midst of these first stabs at expansion that the savings and loan crisis rocked the country’s financial sector. As hundreds of savings and loans failed, bank regulators tightened their policing of not only S & Ls but banks across America. Dick’s had always relied on debt, from the company’s earliest days—we couldn’t have supplied our stores with inventory, or made payroll, or kept the lights on if we hadn’t had a credit line that we were able to carry for most of the year. We’d never missed a payment. We’d always done what we were supposed to do. We were a good account. And one of the ways you demonstrated that was that each year you had to clear your credit line to a zero balance for thirty consecutive days. We did it every year after Christmas.

  But it was a new world during the S & L crisis, and so it was that regulators reviewing the First City National Bank’s books told them that they’d have to dispose of one of their accounts—us. The bank informed us we had sixty days to find a new lender. This wasn’t an easy time to go looking for a fresh source of money. We’d been searching for weeks without success when Larry Schorr told me about a guy he knew at Binghamton Savings Bank, the head of the lending department there, named Glenn Small. “I’ll introduce you,” he said. “He might be able to help.”