It’s the mantra every retailer whispers. It sustains them through working weekends, overnight inventory sessions and pre-sale stocking blitzes. Though it may vary by a word or two, the mantra is pretty much the same for everyone. The only motivation to keep a retailer plugging away goes something like: “It’s all worth it because one day I’m going to sell this business.” The happy-ending outcome of successful succession is a dream everyone shares. Sadly it doesn’t always occur, despite years of hard work building a business. So, when a retailer manages to orchestrate a flawless exit strategy it ranks as a good news event in the industry.
Even though they are the ones who invested the sweat and tears to build their retail empire with seven outlets across western Canada, Roy and Anne Hulse still look back at what ScallyWags Designs Ltd. accomplished with a little bit of awe. The business began in a Kelowna basement and grew to become the darling tenant of Canadian Pacific hotels in Banff, Jasper and Victoria. It also became practically an anchor attraction at upscale shopping districts in Vancouver, Kelowna and Calgary.
The ScallyWags story began in 1986 after Roy and Anne immigrated to Canada “with three kids and 12 suitcases”. Roy’s father had been an independent manufacturer and retailer of ladies fashion in England. Roy cut his teeth there doing the same in menswear while his wife Anne taught school. “The idea we had initially was to come over here and be in manufacturing,” says Roy. “We decided that instead of retail because we wanted weekends off.” Roy dove in with gusto. “The house we bought had a huge finished basement which was marvelous for a business scenario, so I did all the designing and the cutting there. Anne was pretty artistic. That led us into creation of kids clothing.”
What set the ScallyWags product apart from clothing then available was its quality and color. OshKosh, the American heartland brand, made contemporary stylish children’s clothing, but no competitive Canadian counterpart existed. Anne and Roy tried to change that. “We began making reversible children’s clothing out of drapery fabric. It was very unusual with bright colors and people loved it,” says Anne.
While Roy hit the road looking for retail customers, Anne sold their designs at local craft fairs. By April of their first year in Canada, the Hulse team had a business. Just two years after arriving in Canada, their future was also clear. Roy says it came about synchronistically too. ScallyWags were selling well in a store called Open Country in the Jasper Park Lodge, he remembers. “They would just phone up every month and say send us $5000 worth of stock. We’d ask what and they’d say anything because your stuff sells.” In 1988, after a trip to the Calgary Olympics, Roy and Anne decided it was time to visit their most productive retailer.
What they encountered was a store crammed floor to ceiling with adult clothing. Their line was relegated to a single rail in the corner shared with OshKosh. “Our thought was if they could sell this much, just think what we could do,” with a ScallyWags store. “While we were up there we heard that the Banff Springs Hotel was converting the kitchen space into an arcade in the basement level,” says Roy, so the couple went to Banff for a peek. Coincidently, when they arrived the only person working in the Executive Offices at the Banff Springs was the General Manager. He thought their children’s clothes would do well and he offered the couple an offer to lease with a week to decide.
“We’d already leaped into the chasm of uncertainty when we moved here,” says Anne, so the opportunity was not too scary to consider. A week later they signed the lease and a chance inquiry previously by a customer in Kelowna led to the hiring of their Banff manager. A former ski instructor in Vancouver, she had asked about franchise opportunities and Roy offered her a job instead.
“After we opened the store in Banff, we were just pounding -- absolutely pounding. We were still manufacturing stuff, cutting it up in our basement and we had 10 ladies sewing at home.” And, he says, sales were constantly climbing. “We paid percentage rent with CP Hotels and they were doing very well so within six months they offered us a position in Chateau Lake Louise.” “We had a top notch spot and we moved into the new store in January 1990. It was a horrid time of year, but the location was so great,” recalls Anne. The interest in their inventory from tourists was incredible. “Lake Louise is still the jewel. In the summer 10,000 people a day who walk past the store,” says Roy.
Banff and Lake Louise were followed by The Empress Hotel in Victoria. “They asked us if we would be in every CP hotel in Canada.” Roy and Anne declined and instead opened another independent location for ScallyWags on the corner of Government and Fort Street in the bustling shopping district of downtown Victoria. The Fort Street location competed with the Empress store, but had no negative impact. “It was a huge store and a good one,” says Anne, and the success encouraged the couple to venture further afield with retail outlets in the trendy Kensington area of Calgary and in the Kids Only market on Granville Island in Vancouver.
“We had a fully-fledged factory by this time and we had diversified the amount and the styles. We were making raincoats and anoraks and pants and shorts as well as reversible dresses and reversible shorts which were our hallmark,” says Roy. “It was high quality and handmade. There was nothing to compare.”
“We were renting space for everything so we thought ‘let’s own something now’,” Anne says. “We saw the Mission as a potential upcoming area of Kelowna in 1999, so we bought there,” Roy adds. An old sporting goods store became a temporary location until the space was torn down and their landmark building rose up where it once stood. The ScallyWags Designs building is a Victorian-style edifice. It is very reminiscent of the ‘Painted Ladies’ of San Francisco’s Knob Hill, with soaring roof peaks, gables and an eye-catching color scheme like you might find in a Newfoundland outport village.
It was funky and different for Kelowna, so different Anne made a special trip to City Hall the day they were to begin the paint job. “We were on the scaffolding with the paint brushes ready. Before we started I ran down to City Hall and asked them if they were sure our colors were okay. We were a little bit scared,” she says. But the municipal authorities applauded Roy and Anne for their design sense because it helped set a standard for new construction in the Mission district.
“We had set a trend when it came to kids clothes. Before then it was pale blue for boys and pale pink for girls,” says Roy. “We came out with these fabrics which were designed as bedspreads and curtains in bright primary colors. We were making these clothes that were reversible and people were just falling over backwards to get them.”
“They were garish and bright and that’s what kids loved,” says former school teacher Anne. But the bubble of their constant successes burst with the 9/11 terrorism event in New York, says Roy. He calls 2003 the ‘perfect storm’ year for tourism which was a prime driver of the ScallyWags business. World media attention focused on SARS, the forest fires, the avian flu and tourists stayed away in droves. “And at that stage China was just making so many inroads. Everything was being imported. Even companies we used to buy from were designing in Canada and making it in China.” Shutting down ScallyWags manufacturing was a decision Roy says he had to make. “People were buying based on price and we were making a quality item,” he says.
As a designer and manufacturer, Roy Hulse had built an enviable reputation creating ‘happy children’s clothing & toys’. The shift in market conditions forced the couple to re-examine their strategy. As they pulled in their horns on manufacturing, they turned the factory space over to retail. “At the time we were younger and still ambitious and we decided we could easily run all the stores in here,” she says, chuckling.
Inquiries to rent their retail areas didn’t fit the image that Roy and Anne had for their space so they began by creating it themselves. The first new endeavour was the Marmalade Cat Café, a trendy bistro. Edged next to it is a gift store called the Blue Ginger Trading Company. On the other side of the bistro, Roy and Anne had a ladies wear store called Serendipity and it neighbours the Scallywags outlet.
With the new challenges facing them, the Hulse team decided to sell their ScallyWags outlets. Employing the same selective techniques they used to build their business in order to sell it, Roy and Anne are showing they haven’t lost their unique retail touch. Managers were offered the opportunity first. “We’d gotten to the stage where we were looking for success, looking for the rewards. The nice thing about it is we’ve been able to sell off the ScallyWags stores to like-minded people.” Roy says at first he’d attempted a single sale of all stores to one buyer, but ScallyWags didn’t have the critical mass necessary to attract that type of acquisition.
“Two years ago we sold our Vancouver store to our manager. They’ve gone from strength to strength and expanded. We sold the Victoria store to a couple that will take it to new heights and they are looking to expand up the Island. Just recently we sold in Banff to a Banff couple who brought their family into the business and we just sold the Kelowna store.” Today, only their highest profile ScallyWags outlet in Lake Louise remains to be sold.
The buyers, says Roy, reflect the successful example of tomorrow’s retailers. “We see the future of retail still comes down to the mum and pop store. It comes down to the person behind the counter with the hands on, who sees what is selling and gets on the phone to order more. They don’t rely on a chain for direction.” He feels Big Box retailers will continue to erode independent retailers’ market share. “The big boys are going to keep coming and pushing the prices down and down while everything around the small retailer is going up and up,” he predicts, however he feels that the profile for customers is changing and the Big Box strategy is contradictory to the shifting marketplace.
Customers want a shopping experience, he says. “It is up to the retail buyers to go out there and search and search and find the new companies starting up and find the things which are handmade and made in Canada. Have a storyline behind the products, the inspiration behind the products, and then package it all in an environment which is consumer friendly.”
It all sounds almost too simple, but Roy points to his building and the successful results of being unique and fresh in the market. The Hulse team did manage to accomplish the dream of succession at least partially. They have almost completely converted their Kelowna factory space into an eclectic potpourri of trendy shops now. And, while the former 2000 sq. ft. factory space is being used to colorfully retail everything from children’s clothes to organic coffee, giftware and ladies fashion these days, Roy is happily settling into the less frantic life of a landlord who doesn’t have to work weekends.
