Wholesale Success : L.A. Mart Coming Back Strong With Innovative Approach

Ron and Norma Freymuth drove from Corona to downtown Los Angeles this week to arm themselves in their fight against discount stores.

Their weapons of choice: lemonade-themed products for a summer display, nautical items and gifts to sell the rest of the year.

Owners of a Farr’s Stationers franchise in Corona, they and thousands of other shop owners from the West and beyond combed the L.A. Mart and the semiannual gift shows it promotes for wholesale goods that the rest of us will buy in June for wedding presents, August for backyard barbecues, October for Halloween and December for the holidays.

“As soon as it becomes common and the larger discounters and large chains carry it, we can’t compete,” she said. “So, I have to find something new and exciting.”

Helping small businesses such as the Freymuths’ prosper is key to the L.A. Mart’s own success. The wholesale mart suffered a 30% vacancy rate five years ago as the mom-and-pop gift stores that make up the bulk of its customers floundered in the recession.

But the mart is nearly full again after aggressively seeking innovative products and creating incubator space for new companies.

The L.A. Mart’s mission, according to mart President Jon Weiglin, is helping small manufacturers and retailers get “an edge against the mass merchants out there.”

Closed to the public, the L.A. Mart occupies a nondescript building a few blocks south of downtown Los Angeles. Its 13 floors and 1 million square feet of showrooms are packed with candles, picture frames, pillows, pottery, furniture, linens, stationery and thousands of other gift items.

Each year, more than 100,000 retailers, from gas station gift store owners to Neiman Marcus buyers, shop the mart, which displays merchandise from more than 3,000 manufacturers.

Merchandise marts such as the L.A. Mart used to count on sales to local department stores and small chains, in addition to small retailers. But the growth of discount manufacturers such as Wal-Mart and Kmart has shaken up the wholesale retailing industry.

Discounters don’t need to shop the L.A. Mart and four other major marts throughout the country because big manufacturers deal directly with them. Discounters have even become manufacturers themselves, copying high-end designer products carried in the marts. Meanwhile, many local department stores that used to buy from the marts have disappeared in acquisitions by national chains.

Little wonder, then, that Weiglin, has concentrated on the health and welfare of small businesses. During his four years as mart president, Weiglin has lured top manufacturers to lease space and created theme days. And he recruited new customers such as florists, interior designers and stores in Arizona and Las Vegas.

New mart “galleries” offer 100-square-foot cubicles--incubator space for small manufacturers or manufacturing representatives who can’t afford a full-size showroom at the mart.

Joan L. Chase, who used to hit the road representing gift lines from seven manufacturers, turned in her sample cases and set up at the mart. She now occupies a showroom of her own after more than doubling the number of manufacturers she represents.

“More new business comes out of the L.A. Mart for me than I’d ever be able to find on the road” visiting gift shops, she said. “In any one day, I might get three new [gift store owners] from downtown L.A., Arizona and Santa Barbara. I couldn’t be in those three places in one day.”

For gift basket maker Ginger Banko, co-owner of Business to Business Gifts in Yorba Linda, the mart provides not only all the gift items for the company but valuable craft and business training.

“I learned how to do bows!” Banko exclaimed.

Last year, the mart provided about 50 free business seminars on such subjects as computerizing a store, keeping inventory and improving customer relations.

“We show them the product, how to use the product, how to sell the product and how to display the product,” Weiglin said. “It’s in our best interest to help them develop their business or help them sell more.”

Weiglin’s efforts have paid off, giving the L.A. Mart a higher profile in the industry.

“L.A. is a good place to spot trends,” said Anthony DeMasi, editor of Giftware News, a retail trade magazine. “A lot of designers or manufacturers will try the waters in L.A. and L.A. buyers tend to be the risk takers.”

Making a mart unique is the key to survival, said Jon DeVries, a retail analyst with the consulting firm Arthur Andersen. Los Angeles competes with major merchandise marts in Dallas, New York, Atlanta and Chicago--and 25 smaller regional ones.

Regional marts in Kansas City, Baltimore and Indianapolis have closed, and the major marts in Chicago and Atlanta stumbled when they unsuccessfully tried to expand into electronic gift items, said Michael Saks, executive director of the Miami International Merchandise Mart.

The L.A. Mart had its own troubles, Weiglin said, dropping from 100% occupancy in 1988 to 70% in 1991.

The building is now about 95% full, and its 400 tenants include many newer design-oriented companies specializing in furnishings, gifts, cards and other products. It is these young companies that hold the key to the L.A. Mart’s future--and that of smaller retailers, Weiglin said.

“If we don’t set the pace and tell the retailers what the latest trends are, they won’t survive,” Weiglin said. “Our lifeblood is the new product and new education.”