"After 105 years, Phillip Gall's went out of business earlier this month, and its owner sees little hope for most of today's independent retailers in avoiding the same fate.
"Independent retailers (have a disease)," according to Steve Gall, third generation owner of the Woodhill Center outdoors shop. "We knew what the prognosis was — we just didn't know when. We're all sick, and we know what will happen with this disease. We will all die."
National chains that located in Lexington did take a bite out of his outdoor sporting goods business, but Gall said Dicks Sporting Goods and Sportsman's Warehouse only hurt sales of his consumer-aimed, lower-priced items. What did him in, Gall said, was competition from Internet retailers selling discontinued items at low prices, free of the costs of a large store and full staff. He could eat the loss of sales of a shirt or a pair of gloves to larger local retailers, but losing the sale of the big-ticket items to the Web proved too much.
Customers could find old models of sleeping bags and tents online and get them for two-thirds the price of similar items for sale at Phillip Gall's. To Steven Gall, the customer is not necessarily always right: "Because you (the customer) don't know the difference, care about the difference — there went the tent business," he complained as he sat at his kitchen table. It was what he described as his second day ever since he began working in the family's shop at age 10 that he had nothing to do.
"When I would tell you the sleeping bag you're getting (from an online retailer) is probably a two- or three-year-old model, it sounds like sour grapes. The reality is, it was different, (but) nobody cares. The consumer has gotten to be pretty non-discerning," he said. "They don't get it, because they don't want to."
When he started working for his father, Sidney, and grandfather, Phillip, at the store established in 1902, his grandfather taught him, "When a person opens your door, he's paid you the ultimate compliment," because he trusts you and the product you sell over any other in town. Back then customers wanted the product that was the best, not the label that was most popular.
According to Gall, a truthful assessment of client needs and product features wasn't always what his customers seemed to be looking for. "By being honest and knowledgeable, I had a hard time selling (popular consumer-aimed merchandise). Knowledge and honesty probably hurt me as much as anything else," he said.
"(Consumers) get something in their head (because their friend's) got one or they read it on the Internet, and I couldn't get their brain to look at something else. They were so locked in and knew nothing about any of it except the name," he said.
Gall believes his store could be viable at two-thirds the size of his Woodhill shop, but the overhead of 16,000 square feet and rising health care costs for his staff were too much to take on. According to Gall, the volume of his sales has been good over the last few years, but he hasn't shown profit as his costs rose while his margins remained the same.
That's a trend facing many independent outdoor retailers according to Ann Obenchain, vice president of member services and marketing for the Boulder-based Outdoor Industry Association.
"When we poll our retailers, one of the biggest concerns and biggest costs is their overhead, the rising cost of health care and wages. That is certainly one of the biggest struggles wages and expenses are 39 percent of their overhead," she said.
On the advice of Gall's lawyer and accountant, the store has gone into bankruptcy as debts have mounted well into the six-figure range. Gall said he knew a year ago he was going to have to shutter the family store.
"What I did in a private business is exactly what everybody does," Gall said. "They keep trying to prop it, they keep trying to get over a hump, and that's what I did."
Gall said he continued trying to turn around the family business in the hopes of passing it on to the family's fourth generation, but it was a gamble that simply did not pay off.
"You just don't want ever to admit it; (I) probably should have closed three years ago in reality. You continually figure that there is a saving in there, that you can fix it, one good year, one good quarter it just isn't so," he said. "Once you get behind, the catch-up is difficult."