Ever wonder how a year-round holiday store that peddles Santas and snow globes in July manages to survive? Here’s a hint: Make sure that you have lots of money coming down the chimney or you could be in for some rough sledding.
“You have to be pretty well-capitalized to get through,” said Brian Young, who, along with his wife, Laura, and son, Spencer, presides over the sprawling City Lights, a year-round emporium of holiday decorations and collectibles located on Knoxville Street near Morena Boulevard.
“We have grown from 1,300 square feet to 40,000 square feet and we have a huge Web site,” said Brian Young, who opened City Lights Inc. in 1991. “We now ship to 44 different countries.”
The building, which includes warehouse space and 27,000 square feet of retail, houses an inventory valued at $2.5 million, featuring such name brands as Christopher Radko, Fontanini Nativities, Steinbach Nutcrackers and Harbor Lights.
The Youngs also hold open houses featuring visiting artisans, some of whom demonstrate their skills, such as woodcarving, right on site.
In addition to Christmas, which represents most of their sales, the store carries Halloween decorations and some Fourth of July items.
“We tried Valentine’s Day, but it never went anywhere,” said Young. “We tried Thanksgiving, but it struggles.”
Back Story
These days City Lights and, to a lesser degree, the Mistletoe shop at Seaport Village, have the year-round holiday market sewn up. But it was never Young’s intention to become a merry mogul of holiday merchandising.
A transplant from London who moved to San Diego in 1987, Young had spent years building and directing a large retail group related to the jewelry industry.
“I finished up with the largest mail-order catalog in the U.K. for jewelry,” he said.
But, Young observed, “The better you are doing, the less money you have in your pocket. The only way to get any money from the company was to sell it.”
So he did.
“I came to San Diego to retire and I was bored out of my mind,” said Young.
He had seen holiday stores during his travels, and figured this type of business would be a good fit.
“I didn’t want to do much,” said Young. “I had no need to have a business or have a money-making concern.”
Initially, Young invested $250,000 into the fledgling business.
“A major expense was the launch of City Lights’ Web site in 1998 at a cost of more than $100,000,” he said. “Now it represents a large percentage of our business. It carries us through the lean months, so we aren’t dependent on the local economy.”
While tax time is City Lights’ slowest period stateside, it doesn’t have an effect from customers internationally.
“If we are serving somebody from Germany or Ireland or Korea, April is not their tax month,” said Young.
Asia has emerged as a promising market. Two years ago, Young recalled that a department store in Tokyo featured a Charles Dickens village imported from City Lights.
“They did a huge window display , 70 pieces,” he said. “They had found us on the Web site.”
City Lights’ domestic customers have included SeaWorld, Viejas Enterprises resort, and hotels at Mission Bay, the Hilton San Diego Resort and Paradise Point Resort & Spa.
About two-thirds of City Lights’ customers are female, from “young mums to older people,” said Young, and while they tend to have disposable incomes, they don’t have to be wealthy.
“We have 49-cent items all the way up to $1,000,” he said.
City Lights imports most of its merchandise through distributors, with only two U.S.-made lines remaining , North Carolina-based Byers’ Choice Ltd. carolers, and sleigh bells from suppliers in Pennsylvania.
“The cost of labor in the U.S. is very high compared to the rest of the world,” said Young. “Asia turns out far more than the average U.S. worker, and even more than the European worker. And labor costs are so much less. They are fastidious. You can’t fault their quality.”
Young is very big on quality.
“If you get (merchandise) returns all the time it drives you mad,” he said. “We are very quality conscious. I learned that at the very beginning of my retail career.”
Market Forces
But that doesn’t mean that Young has nothing but visions of sugar plums dancing in his head.
“At the moment, there is a definite slump in the industry, and many of these stores are closing around the nation,” he said.
His own market of avid collectors also is dwindling.
“I don’t see a turnaround in 2008,” Young mused. “The mortgage situation and the price of gas have taken disposable incomes away from a lot of people.”
Still, his business, which employs 36, has been holding its own, said Young. While he declined to disclose revenues, he said that they have dipped less than 1 percent over last year.
“We lost some local trade, but we picked up on the international trade,” said Young. “This year, we’ll probably be down 3 percent overall.”
Apart from scaling down his inventory somewhat, Young refuses to leave his customers high and dry.
“We are doing everything we know how to do,” he said. “You can cut corners where you can, but not by the quality or service that you give your customers. That is prime.”
Young said that he has been able to maintain that standard by becoming a regular presence at the store, often charming his female customers with some cockney patter. He has no desire to lose that connection by spreading himself too thin, and has rejected partnership offers to open stores in Orange County and San Francisco.
“I am here seven days a week, my wife and son are here six days a week,” he said. “I don’t need a partner.”
Nor does he intend to relocate to posher digs in a higher-profile area.
“We are a destination,” he said. “If we were in a mall, we could never afford nine months of the year. We’d be running negatively.”
But Young said that he is “seriously considering” starting a wholesale operation.
Limited Market
While there are party stores around the county that sell special events and holiday decorations, they tend to be rotated on a seasonal basis. Those that have marketed themselves as year-round holiday stores haven’t fared as well.
Young isn’t surprised.
“The county couldn’t carry more than two,” he said. “There is not enough business throughout the year.”
George Whalin, founder of Retail Management Consultants in Carlsbad, agreed.
“It’s limited,” he said. “I travel a lot and I see a few of these stores, and they tend to be in touristy areas and do well in colder climates.”
As an example, he cited Bronner’s Christmas Wonderland in Frankenmuth, Mich., billed as the “World’s Largest Christmas Store,” boasting a half-mile-long Christmas Lane.
“It’s a holiday store on steroids,” said Whalin.
What also helps these types of businesses is diversification, he said, including wholesaling and Web sales.
“I think you have to have those things, and be more than just a retail store,” said Whalin.
For Mistletoe President Robbins Kelly, owner of Coronado-based RCK Enterprises Inc., the secret to success has been “location, location, location.”
“You need a real tourist area to get it to work,” said Kelly. “Fortunately, we are in a very high-traffic area.”
Comparing her business to City Lights, Kelly said, “He carries everything and has the Internet. For me, I have 800 square feet and it’s not all retail space.”
Mistletoe also carries some seasonal decorations for Halloween, Thanksgiving, Easter and Fourth of July. But don’t expect to find any big-ticket items.
“Nobody’s going to come to us and buy a whole theme tree, because we don’t have that kind of space,” said Kelly. “We sell mostly ornaments.”
Kelly, who bought the business in 2004 and won’t disclose revenue figures, said that the store is “doing fine.”
“Have I seen an increase in my sales? No,” she said. “Has it gone down the toilet? No. Sales are kind of where they were.”
But that’s OK with Kelly, who considers her Seaport Village location a solid proposition.
“If you look at the numbers, it’s not that risky,” she said. “I’ve been in retail for about a zillion years.”
A former bookkeeper for Chart House restaurants, among other bean-counter jobs, Kelly said that she thoroughly crunched the numbers with her accountant before she took the leap.
Meanwhile, Young is sharing his wisdom as a member of the newly created retailers’ advisory board of the L.A. Mart, a wholesale emporium in Los Angeles.
As for retirement, Young doesn’t have any immediate plans.
“There is no question about keeping the business going,” said Young. “My son is 32 years old. This will be his life. I still expect to be here 25 to 50 years from now.”
