Retail Observer

RETAILOBSERVER.COM OCTOBER 2016 72 O f all the words that could be used to describe Rent-to- Own operators over the past decade, it would be survivors. RTO dealers have to work harder and smarter to maintain the same level of business that they have become accustomed to in previous years. This summer appears to be tougher than normal, and no one is quite sure why. Is it because of the election year? Is disposable income down? Or is there more competition for the customer's dollars? While sales and revenue seem to be staying level, the biggest challenge of late has been collections and employee staffing. People jump from job to job now like never before. Help wanted signs are always out! Working smarter and being a survivor has required dealers to control costs even more in order to maintain profitability. Being a survivor is nothing new for this industry over the past 25, 30 even 35 years. The industry has gone through tough economic times, fought off severe IRS legislative reform, and even battled natural disasters such as floods, hurricanes, fires and tornados. Being survivors has always been a trademark and when things get tough, the tough get focused and rise up. When I speak about survival in the retail industry, particularly the rent-to-own market, I am reminded of one of our dealers in Wisconsin named Lebakkens. The Lebakkens' retail chain, founded by Loren Lebakken in 1975, is the perfect example of a business that has endured numerous trials and tribulations and yet, remains in business today. Three years after its original inception as a Curtis Mathes showroom in Rochester, Minnesota, a devastating flood destroyed the store. This calamitous setback may have caused another business owner to abandon dreams of building a thriving retail chain. However, Lebakken did nothing of the kind. Instead of folding up shop, he opened a new showroom in Wisconsin a year later. Shortly thereafter, he traded in his store's Curtis Mathes placard for one that read Lebakkens. In a turn of events that demonstrates the unique challenges that an independent retail business faces, Lebakkens was faced with another potentially catastrophic dilemma during the 2007-08 financial crisis. Even when the worst appeared to be over, credit and loans became suddenly hard to come by. In dire straits due to the sudden inability of small businesses to get bank loans at the time, Lebakkens' future appeared to be questionable. In a testament to the grit and determinations of its founder, the business was able to secure a much-needed loan from a bank in Texas and fend off potential insolvency. Lebakkens eventually rebounded from the economic downturn that affected the entire nation. Today, the store, helmed by Loren's son Jeffrey, remains a retail powerhouse with 11 locations throughout Wisconsin. Lebakkens' ability to stay the course and stave off financial ruin is a rarity among independent retailers whose very survival depends on ingenuity and a vision for the future. The transition from the Curtis Mathes name to Lebakkens years ago brought more than just change to the store's name. In a strategic move that foresaw the future of the industry, Lebakkens implemented the relatively new concept of Rent-to-Own in the period after the store's renaming. Although revolutionary at the time, it was precisely the kind of inventiveness that distinguishes a business that has the ability to survive and one that does not. In the years to come, the Rent-to-Own feature in Lebakkens' stores would become one of its signature offerings. In today's market, independents like Lebakkens, even with 41-years in the retail business, must be constantly vigilant of new trends or changes in the industry that may drastically affect their bottom line. With the ever-present box store looming in the distance, the survival of independent retailers depends on their ability to adapt to a rapidly changing sales environment. Lebakkens has demonstrated this rare quality time and time again while faced with some of the most unforeseen catastrophes. When it comes to the recipe for survival in the world of independent retail, Lebakkens appears to have the market cornered. SURVIVAL OF THE FITTEST IN THE RENT-TO-OWN BUSINESS RO Dennis Shields Rent-to-Own Trends Dennis Shields, executive director of the TRIB Group

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