The team at this airport retailer has created a cohesive, supportive culture along with creative approaches to a challenging business. The airport retail business is, in many ways, an entirely different animal from retail in a mall or downtown area. Although the stores have a prime location with a large, almost hostage population that mostly falls in a very positive demographic for shopping, these people didn’t come to the airport to shop, turning every purchase into an impulse buy. But Susan Stackhouse and her team at Stellar Partners, Inc. thrive in this environment.

Stackhouse has been working in airport retail for 30 years; after working for a retail clothing chain in Florida, she joined Bonanni Exports, a group of companies operating duty-free stores and ship chandleries. The owner announced his retirement in 1986, and Stackhouse purchased the company with a partner she later bought out, transforming it into a full-blown airport retail organization. 

Stellar Partners operates news and gifts shops as well as duty-free stores, but its hallmark is its more creative concepts. The company developed a children’s toy and gift concept called Mindworks, is the exclusive airport operator of Ron Jon Surf Shops, and is currently launching a pet specialty store called Dog-E-Works.

“When people come to the airport, they are focused on catching their flights, not shopping,” Stackhouse explained. “Our bread and butter will always be newsstands, which are an easy sell for harried travelers, but through a fiscally conservative strategy, we’ve been able to launch some of the most successful specialty stores in the business.”

Mindworks came from a one-time partnership between Stellar Partners and FAO Schwartz during its major expansion phase in the 1990s. FAO was frustrated at the slow, rigid expansion process in airports (winning space requires a drawn-out bidding processes, and leases are usually five years or longer), but Stellar Partners saw how a specialty children’s gift store met an untapped market.

“The only merchandise for kids were the stuffed animals and cheap trinkets in the newsstands. Parents traveling with kids want something to keep them occupied, and traveling relatives want a place to stop in and find a gift,” explained Stackhouse.

So the company launched the concept at its home base of Tampa , and there are now nine locations across the country. Although Mindworks, like all specialty airport retailers, was hit hard by the recession, it’s rebounding with double-digit growth far outpacing the increase of airport traffic. “When the worst of a downturn passes,” Stackhouse said, “children are often the first beneficiaries of increased discretionary income.”

The next trend Stellar Partners will be tapping is the pet product industry. “The statistics on how much people are willing to spend on their pets is mind-boggling,” Stackhouse said. The company has one location open in Orlando and hopes to open one in Tampa this year.

In total, Stellar Partners will be adding five new stores in 2010. With the four it opened last year, that brings the company’s national footprint up to 40 locations in 12 airports.

No secret to success

Stackhouse said there are two crucial but simple reasons for Stellar Partners’ success over the years and in this slow economy. The first is the company’s highly conservative financial strategy: it has no debt. That was a lesson Stackhouse said she learned from her first job in clothing retail. The company she worked for grew too rapidly, was almost completely leveraged when the economy shifted, and suffered a long, slow death as a result.

“As we generate more capital, we reinvest in our business,” Stackhouse said. “Our reluctance to take on debt has meant we’ve missed some opportunities, but in hindsight, it was the right thing to do. Unfortunately, some of our competitors have gone under because they couldn’t survive the credit crunch.”

And Stackhouse has been through more than one downturn herself. She said 9/11 was a real wake up call: airports were closed for four days, and no one knew when they’d be able to open again. But Stellar had the reserves in place to get through the worst of that. She’s also seen airlines go out of business, another unique hazard of airport retail. It doesn’t matter how the economy is doing when there are no travelers in the terminal where you’re located.

The second reason for Stellar Partners’ success is its culture. Stackhouse said she has worked with the company’s controller for more than 25 years, and many of the company’s employees have been there for 15 years or more. That generates a great deal of cohesiveness, along with a great amount of pride in each person’s work and the success of the company, Stackhouse noted.

Another unique aspect of the company’s culture is that Stackhouse, a woman, is the majority owner. Few retailers can say that, and Stackhouse was also the only woman ever elected to the board of directors of a publicly held duty-free company. 

“I started in this business in the early 1980s when the opportunities for women were very different, but there were a number of great people who mentored me along the way, so finding talented young people, especially women and minorities who might not have much exposure to business, and giving them an opportunity to succeed has become an important goal of mine,” she said.

Stellar Partners hires a few promising high-school students, with demonstrated financial need and academic achievement, every year to work at its corporate offices, giving them experience and a background in business. One young woman who started at the company as a junior is just about to graduate college; Stackhouse said the company works hard to accommodate class schedules and give these students a leg up in the business world.

“One great thing about working at Stellar Partners is we never let our success go to our heads; we always remember where we’ve come from and the challenges we’ve faced,” she said. “That keeps us humble and honest, but also eager for the challenges that lie ahead.”

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