Charmed to meet you

CHARLIE CHANARATSOPON deals with “candy” but does not have a chocolate factory. His Charming Charlie stores do not sell sweets, but rather sweet-looking accessories in all sizes, shapes, cuts, and colors. “It’s a candy store for women,” he told BusinessWorld when he visited the country on July 12.

CHARMING CHARLIE NYC Flagship Opening

He is the founder and CEO of the accessory store Charming Charlie, which Forbes magazine said made $550 million in sales in 2015. Mr. Charlie Chanaratsopon was included in Forbes’s list of “America’s Richest Entrepreneurs under 40” that year.

He was born in the USA after his family migrated there from Thailand in 1974. The family went on to found a sterling silver jewelry business. “I grew up in a business-oriented family. I love business. Period.”

The former real estate analyst was not really planning to be a fashion mogul. “I have more of a finance background. So I built a shopping center and the idea is to put more stores in it,” he said.

His first accessory shop, with pink doors, mirrored shelves, and gilded interiors, opened in Houston, Texas in 2014, and was meant simply to fill up space in the shopping mall he was building.

“Charming Charlie became popular really fast. So we flipped. We focused on it, and said, ‘Okay, let’s be the best fashion jewelry store we can be.’ In 2007, I stopped building malls.”

Now there are more than 370 Charming Charlie stores in the US, and branches in Canada, the Middle East, and the Philippines where a store has opened at Central Square in Bonifacio Global City, Taguig. This year, a second branch will open at Glorietta 2 in Makati.

“The overall thesis was, here’s an idea that can make a lot of money. At that time, I saw a few local players doing well in warehousing fashion jewelry,” he added.

“It was spontaneous, and so, here we are.”

He remembered one of his first problems was christening the store with a catchy name. “I was torn among many suggestions but three names stuck with me the most because they were pretty bad,” he said while laughing — “Accessory City,” “Accessory Buffet,” and “Funky Monkey.” The a-ha moment came when someone said “Charming Charlie.”

The accessory brand projects itself as a “candy store for women — except they are fashion items,” he said.

Charming Charlie sets itself apart from similar stores by arranging its broad assortment of products — fashion jewelry, handbags, scarves, etc. — by color, 26 to be exact. There are the basic colors and there are other shades like “French roast,” “light sea foam,” “adobe,” and “pool blue.” The Philippine store offers more basic color choices in black, white, gold, and rose gold. But there are also a few bags and bangles, watches and wallets in red, yellow, and blue. The price range is competitive: starting at P250, nothing costs more than P2,500.

ACCESSORIES OVER APPAREL

But if given a chance to fill up the shopping mall empire he was originally building, would he stick with an accessory shop or choose another business venture?

“I do not like apparel,” he said bluntly.

Clothing items, he said, are hard to market because competition is tough. There are established fast fashion brands he would have to compete against like Zara, Mango, Forever 21, and H&M. The business of clothes, he said, is also deflating.

“In the last 20 years, it has deflated. The cost has gone down one or two percent a year, while everything, meanwhile, has inflated.”

“But I like accessories,” said Mr. Chanaratsopon, who was wearing a white button-down polo shirt and blue houndstooth blazer. An oversized watch was peeking from under his sleeve.

He said he likes accessories in a sense that they do not come in sizes, which makes the business easier to manage. Also, they have “better margins and fewer competition.” Plus, his experience with the family business in jewelry also helped him navigate the ins and outs of fashion accessories.

LESSONS LEARNED

Like any other startups, Charming Charlie started at the bottom, relying on word of the mouth. “There was no Facebook yet,” he said. But there were cellular phones.

“I’d sit at the stores and see how women shop,” he said. He noticed that whenever women saw something they fancied, they would immediately get on their phones to call their girl friends to herald the good news: “I saw a watch I am totally crushing on.” Or, “I found a necklace that would upgrade my look.”

Through customer analytics, he learned women want to shop by colors, so he arranged the stores by color. And since then, Charming Charlie has been known as the “color store.”

If there are things Mr. Chanaratsopon has learned as a businessman, he said listening is always important. “Be customer-centric,” he said. He also added that it pays to think out of the box and always be inquisitive and ready.

“There are challenges every day. When we started in the US, we didn’t have direct competition. The first few years [were spent] learning the playbook, meaning, make the big mistakes early when there’s fewer stores. If there are big things coming down the road, I tell the senior staff — whom I call the ‘binoculars’ — ‘Hey, you got to see the big bumps coming.’ When you’re smaller, you can turn quickly when there’s a big bump, but when you have so many stores, the bumps hit you a lot harder. So we wanted to get the big bumps out [of the way] during the first three years before we grew. Then we opened very fast after that.”

In 2010, Ernst and Young named him the Entrepreneur of the Year in the retail category. In 2013, Forbes magazine featured him as among the ones to watch for. While his business was still at its infancy, he decided to pursue an MBA at the Columbia Business School which he finished in 2007. But the businessman is not content to rest on his laurels. “Every day is a learning process,” he said.

After 12 years, he has no plans of slowing down. He said he’s opening a store in Mexico next year. He also said that Asia is an important market. He is eyeing expansion in China and Hong Kong soon. What about Thailand, BusinessWorld asked. Eventually, he said, smiling.

As brands get bigger and the competition gets tougher, businesses should learn how to heed the signs of the times by tapping into the powers of technology.

“Now we cannot rely on the word of mouth alone. The brand has to be aggressive,” he said.

Charming Charlie, and the rest of today’s brands, he said, are tapping “online influencers” because: “bloggers have millions of followers, they are relevant, and authentic. Their posts go viral very fast.

“You know what? Celebrities do not move the needles anymore. We want to market with real people,” he said. — Nickky Faustine P. de Guzman

Original posted…

http://www.bworldonline.com/content.php?section=Arts&Leisure&title=charmed-to-meet-you&id=130523

How ‘Charming Charlie’ Built a Hit Fashion Chain In Under A Decade

Charlie Chanaratsopon is a young man in a very great hurry. “I hate downtime!” exclaims the 35-year-old Thai-American, chopping the air for emphasis. With his slicked-back hair and sleeves rolled up to the elbows, he’s always ready to get down to business–even as he weaves frantically in and out of Houston traffic in his black Mercedes S550, eager to show a visitor one of his stores. “I’d probably be the worst lawyer, worst doctor, the worst engineer on the planet because of my ADD-ness,” says Chanaratsopon (cha-na-ROT-such-pon).

No examples of botched cases, mangled surgeries or shoddy construction in his world. But there’s an element of reckless endangerment in Chanaratsopon’s rush to build a retail chain of accessories. In less than a decade the young founder and CEO of Charming Charlie have built a $400 million-plus (sales) mini-empire of watches, necklaces, scarves, and handbags–284 stores in 40 states that FORBES values at $1 billion-plus. With an estimated net worth of $500 million, he’s careening toward billionaire status before his 40th birthday.

Since launching his first store in Houston nine years ago, Chanaratsopon hasn’t slowed down a white. He’s now opening five stores a month, mimicking the model of fast-fashion giants Zara and H&M by selling attractive but cheaper versions of trendy items, sourced from Asia. Examples: $15 scarves, $9 sunglasses and $7 to $15 iPhone cases. Customers spend, on average, $30.

Is he making money? Chanaratsopon insists that all but one of his existing locations is profitable. The company’s Ebitda is an estimated 15% or so–better than most apparel chains but far below luxury retailers like Coach COH -1.76% and Michael Kors. Chanaratsopon refuses to comment on a key index–same-store sales growth–though it’s probably safe to peg it at 10% (Francesca’s, a clothing and accessories boutique with 360 outlets, does 10% to 15%). One former Charming Charlie buyer claims on her LinkedIn LNKD +% page that her division, apparel and accessories, expanded 26% across same stores in 2012.

Chanaratsopon says he’s in a race to capitalize on a burgeoning trend. Accessories are a $9.2-billion-a-year business in the U.S. and expanding swiftly. As a category, paired with beauty and footwear retailers, it grew six times as fast as other mall-based apparel stores from 2007 to 2012, reports Credit Suisse. “We’ve spent years brute-forcing things across the finish line,” says Chanaratsopon.

His drive runs deeper than business, supercharged as it is a familiar immigrant success story. His maternal grandfather worked at a gas station in Houston to put his two daughters through college. As the first generation born in the U.S., Chanaratsopon always felt the heat to keep pushing. Perhaps a frightening childhood episode played a part, too. Burglars broke into his house at 2 a.m., tied up his family and forced his father to give up all their valuables. “They put me on the floor and started kicking me,” he recalls. “They took the revolver out, shoved it in my throat, clicked it back. I’m 13, and all I remember thinking is, ‘Well, I think I had a great 13 years.’ “

His parents, who immigrated in 1974, had founded Silver Express, a sterling silver jewelry outfit that sourced production from Thailand and sold on consignment to the likes of J.C. Penney, Nordstrom JWN -3.11%, Target TGT -1.46% and Wal-Mart. Chanaratsopon grew up with the business, watching his parents work 18-hour days, overhearing dinner-table discussions of employee issues and traveling with them on sales calls and sourcing visits.

Some of that business education surely stuck, since Chanaratsopon ended up in the elementary school principal’s office after charging first-grade classmates $1 a day to rent his Nintendo games. Profits fueled more game purchases and, hence, more rentals. Today, he says, “I’m still buying and selling–that’s what I love.”

There were detours. After graduating from Loyola Marymount in Los Angeles with a degree in finance, he became a real estate analyst at Sanwa Bank, then came back to Houston to help his dad find a new headquarters, persuading him to build rather than lease. Chanaratsopon supervised construction of an office building as well as an adjacent strip mall, which he quickly filled with tenants. That venture was so successful he started financing construction of other shopping centers in Houston’s suburbs, building seven in two and a half years. “It wasn’t being smart, it was kind of luck at the time,” he muses. “The real estate market was so hot, and they were valuing it so high, whatever you built you could make so much refinancing and selling it.”

But Chanaratsopon couldn’t sit still. He dreamed of building 100 such malls and making more money by owning the store that anchored them all. But what kind? Apparel had too many players. Harwin Avenue, Houston’s stretch of discount stores offering cheap imports in warehouse settings, offered inspiration. With leftover consignment returns from Silver Express as the merchandising backbone, the first Charming Charlie opened in October 2004.

It nearly died after the first month of desultory traffic. On a whim Chanaratsopon decided not to pull the plug and re-lease the space but to stay open another couple of weeks. Thanks to dumb luck, or a direct-mail drop, women started queuing up outside the doors before Charming Charlie opened each morning. “It became the ‘in’ place for suburban moms’ day out,” recalls COO Steve Lovell, who joined the company after the third store. “Word spread like crazy. My wife heard about it from her friend before it ever opened near us.”

Charlie Chanaratsopon didn’t need much encouragement to start fast-tracking. “Own the store, own the complex–that was the idea,” he says. “That kind of turned when I realized you couldn’t physically

on it, didn’t complete the thought,” he says. Take two, launched in October, is clean if the unexciting website that isn’t yet mining a potentially rich vein of customer data.

If there are speed traps ahead, Chanaratsopon seems determined to ignore them. Says Bill Moreland, the new vice president of real estate, “It’s 100 miles per hour all the time around here.”

Original Posted…

https://www.forbes.com/sites/briansolomon/2013/11/27/speed-demon-how-charming-charlie-chanaratsopon-built-a-billion-dollar-fashion-chain-in-under-a-decade/