Names Are the Game at Adele’s Encino-Based Gift Shop Chain
The medium is second only to the message at Adele’s, a chain of stores loaded with knickknacks and bric-a-brac that are anything but cheap.
A candy-filled acrylic box with an inscription such as “Have a nosh with Doris and Jerry” goes for $36. A gum-ball machine with a label such as “Jerry’s Bubbles” costs $47. A wall clock that can be styled after someone’s business card sells for $50.
Encino-based Adele’s bills itself as the nation’s only franchiser of shops that sell personalized gifts. Almost every item sold at Adele’s is labeled in some way, and those messages are good business because they allow for higher mark-ups.
“Names are their game,” said Gary de Masi, editor of Giftware News, a Des Plaines, Ill.-based trade magazine. “Personalization is either very pricey or very cheap. Adele’s is pricey.”
The entire business is made up of one company-owned store--Adele’s II on Ventura Boulevard in Encino--and five franchises elsewhere in the Los Angeles area. But Adele’s principal executives, Ted H. Margulis, 55, and Jerry Hurwitz, 50, plan to open about 30 more franchises in the West during the next two years.
The existing franchises are in Brentwood, Costa Mesa, Marina del Rey, Pasadena and Torrance. Adele’s claims that its franchisees have gross profit margins of up to 60%, and generate sales of $200,000 to $400,000 annually per store. The company says its 1,800-square-foot Encino shop has sales of an impressive $375 a square foot annually, or about $675,000.
More than 70,000 gift shops do business in the United States, according to Gifts & Decorative Accessories, an industry magazine based in New York. Only a relative few, however, take special orders for gifts bearing personalized messages.
‘Really Makes a Hit’
“Lots of stationery stores can sell you a mug that says Happy Birthday,” de Masi said. “But the one that really makes a hit says, ‘Happy Birthday Uncle Wally, Love Sylvia.’ Uncle Wally will keep that mug until he dies.”
Retailers also like selling personalized gifts because they rarely are brought back, although Adele’s says it will accept returns.
No business has gotten into personalizing like Adele’s, said Natalie Marcin, retail editor for Gifts & Decorative Accessories. The business was started in 1945 by its namesake, Adele Gross, whom Marcin described as one of the pioneers in the personalizing business.
Gross originally opened a store on Rodeo Drive in Beverly Hills that sold such items as lingerie, bathrobes and purses, all with embroidered monograms. She sold out in 1971 to Margulis, and he brought in Hurwitz four years later.
Today, Gross, an energetic 81-year-old, works behind the counter four days a week in the Encino shop. Gross says her favorite part of the business is helping customers phrase their messages.
$25,000 Start-Up Fee
Margulis is in charge of franchising, and Hurwitz runs the Encino store. Margulis and his wife, Shirley, own 50% of the business, and Hurwitz and his wife, Doris, own the other half.
Franchisees pay Adele’s an initial $25,000 start-up fee, and then pay monthly royalties of 5% of sales. Another 2% of sales goes to corporate advertising. Each franchise is required to spend another 1% on local ads.
Many of Adele’s customers are “cultish” about the stores, going to them for nearly all their gifts, de Masi said. Two of the franchisees, in fact, were longtime customers. Hurwitz hopes that other customers might be interested in putting up the initial $80,000 to $150,000 he says it takes to start a franchise.
Adele’s stores try to control costs in several ways. The stores tend to be in smaller shopping centers, where rents are lower than in big malls, and they occupy no more than 2,500 square feet. Most inscriptions and painting are done by a part-time artist in the back room. The rest of the staff generally is made up of a full-time wrapper and three salespeople, including the owners.
Big Sellers
Some specialized gifts--such as a ceramic Monopoly-style board with events and people from a family’s history--are made by subcontractors. The boards cost $225.
Among the big sellers are costumed teddy bears. For example, Hurwitz said, a former Playboy bunny gave Hugh Hefner a bear dressed in a silk pajamas and a smoking jacket. Such an order costs about $100.
The average gift sells for about $35, although a custom crystal jewelry piece recently sold for $2,600. Margulis said it pays to cater to the well-heeled instead of the masses in such a relatively low-volume business.
The stores themselves are packed tight with gifts. Hurwitz said nearly 3,800 items are kept in stock, from more than 500 suppliers. Margulis said the store stocked 600 items when he bought the chain.
Clear acrylic is especially popular with Adele’s because it is an easy surface to paint. The company prides itself on the way it wraps the gifts, and Margulis says its cellophane and straw gift wrapping are trademarked.
