Behind the Success of The Paper Store: A Diversified Approach to Retail Management

The Paper Store’s 32 locations – which average 8,500 square feet in size – carry familiar brands like Hallmark, Yankee Candle and Vera Bradley. “We have an excellent selection because our stores are rather big,” Anderson emphasizes. “What we do to make the business really work well is carry brands, but we’re not totally branded. While we carry five or six major brands, we also carry a whole bunch of other brands nobody would be aware of. It’s a balance between those.”

Anderson founded The Paper Store when he purchased a stationery store in Maynard, Mass., in 1964. Gradually, he diversified the store’s product offerings into its present panoply. Among the diverse products to be found at The Paper Store are gifts, social expressions, books for all ages, fashions and fashion accessories, and bath and body products. Social stationery and custom invitations, infant fashion and specialty gifts, home décor and tabletop items, educational toys and games, and gourmet foods are also on display. Why the variety?

“I’m a product of parents who went through the Great Depression,” Anderson reveals. “They were very conservative folks. So I had always learned to be cautious, be cautious, be cautious. So, I developed my business into about 12 different categories, 12 independent businesses, if you will. I manage it all by putting a person in charge of each one of those businesses, and that person is a buyer. The buyer manages the inventory, and they manage everything about that part of the business.”

This diversity gives Anderson flexibility in running the business. “We flex up and down on space allocation in the store depending on how each of the businesses is doing, but never get out of any one of those components,” Anderson relates. “That is how I always wanted to be – very cautious, never jumping – even though I could do more business eliminating something and going full force into that other category. I always know that things change. I always want to be in a position so things can change.”

No Micromanagement

The division of the business into separate product categories enables Anderson to stand back and empower the buyers and store and division managers to run their areas of responsibility without him micromanaging. “I am the least micromanaged person on the planet,” Anderson jokes.

“They’re really running their own business, if you think about it,” he points out. “The person in charge of Hallmark, that’s her business. She does all the buying, buys all the fixtures, and whenever we go into a new store, she’s in charge of handling all the setup. She’s totally responsible for that whole business. That business does probably $15 million. It’s a decent-sized business for somebody to run.”

Anderson says he delegates everything. “I interact with these people every day,” he says. “I just go over and ask them what’s going on, and they tell me. They ask me, ‘How would you handle this?’

“They know more about their specific business than I do, but I know more about business than they do. I help them apply business principles to whatever they’re doing.”

Employee Longevity

Anderson credits the autonomy he gives his employees as a reason many buyers work at The Paper Store for 15 to 20 years.

“The most important thing in my business is my people,” he emphasizes. “I always want to make sure that they’re in a good place. One can always do different things in business, but if you don’t take care of your people, you might as well hang it up. We as business owners have a moral obligation to take care of our people and make sure they have an insurance program and a 401(k) program. If they run into some personal problem or financial problem, you should have a system there so you can help them.”

The Paper Store offers its employees medical and dental insurance along with a 401(k) program and Christmas bonuses. Anderson says he does not have to motivate his employees.

“They seem to motivate me, because they’re all responsible, and they’re so into doing what they’re doing,” he remarks. “They go to work before me, and they leave after me. My people are just incredible, in that sense. They’re the motivating factor – if it wasn’t for them, I wouldn’t be motivated.”

New England Specialist

Although The Paper Store is remaining in its New England region, the company plans to expand to 36 stores by August with 12 more stores planned for 2013. “My process was to build a large infrastructure,” Anderson explains. “Right now, we could easily handle 100 stores with our current infrastructure.” The company’s single 120,000-square-foot warehouse is located in Leominster, Mass. He estimates he turns his inventory three-and-a-half times annually and carries more than 40,000 stock keeping units.

The Paper Store’s marketing efforts run the gamut, Anderson remarks, from television, radio and catalog mailings to Facebook and Twitter. Anderson believes the number of categories in which The Paper Store is competing makes it unique. “In every single one of our categories, someone is competing, but nobody is competing in all our categories,” he emphasizes. “That’s one of the reasons we’ve been so successful.” Being able to expand or contract a department’s size in each store – some stores have more candles or books than others – has been key, he maintains.

Anderson is passing his success on to the next generation. Five of his children are in the business. His son Tom is the operations manager, John is responsible for deal-making, acquiring stores and real estate, Jim is in charge of the shipping and receiving portion of the business, and two daughters, Laura Carolyn and Meg Lavoie, are in charge of the buying office. Grandchildren who are in college have been working in the business during summer and Christmas seasons. “Christmas is 30 percent of our business,” Anderson says with a twinkle in his eye.

He tries to pass on whatever wisdom he has gained in his retail business and in running and selling a circular printing business. “Business is business,” he insists. “I don’t care what business you’re in. All business is basically the same. Businesses are all run on the same principles. Financial things make common sense. You have to market and promote to grow your business. Common sense is how you run a business. I think the keys to success are discipline, determination, dedication and desire.”