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Shopping-center kiosks are a way to try retail ownership

SMALL BUSINESS

It's a $12-billion industry in the U.S., and it costs relatively little to get started. But hours can be long and profit isn't certain. These days some operators lease space for as little as a month.

October 20, 2009|Cyndia Zwahlen

Silvia Spross took a baby step into small-business ownership when she opened a jewelry kiosk on Santa Monica's Third Street Promenade.

It took just $11,000 to set up Lapzos Beads, including $3,500 for the first month's rent. So far the Swiss immigrant has hit her goal to average at least $200 a day in sales of the necklaces, rings and bracelets she makes from rough-cut semiprecious stones, polished rocks and beads from around the world.

"I would love to own a little store but figured this would be a great start, just to see if it works," said Spross, whose lease runs just through January. She started the business this month after quitting her job as a bead-store manager when her hours were reduced.

The Santa Monica resident is part of a growing band of mostly micro entrepreneurs who set up shop for as little as a month or two in the carts and kiosks that line the corridors of shopping centers around the country.

They sell jewelry, cellphones, hats -- even teeth-whitening services. Crocs, the ubiquitous plastic shoes, started as kiosk items.

It's a $12-billion industry in the U.S., said Patricia Norins, publisher of Specialty Retail Report, a quarterly magazine based in Hanover, Mass., that covers news about kiosks and temporary stores.

It can be a lucrative business, especially around the holidays. Jennifer Telfer, vice president of operations at CJ Products in Oceanside, Calif., said a single kiosk operated by her company to sell stuffed animal pillows she invented rang up sales of as much as $125,000 during the holiday season last year.

Some kiosks open just for the holidays. The hours are long, and not all operations are profitable.

But for those who want to get a toehold into retail ownership, it can be a good opportunity. Business owners typically lease their kiosks from property management companies. They might sell their own products, such as the stuffed animal pillows, or agree to hawk items that mall operators want sold. Hundreds of companies pitch kiosk concepts to mall owners and directly to kiosk owners at trade fairs.

At some kiosk locations, rents have come crashing down after years of steady hikes, thanks to the recession. A mall kiosk that might have rented for $8,000 a month last year can be had for $6,000, which is what it cost about 10 years ago, Telfer said. Many locations rent for even less, depending on foot traffic.

Because of the recession, some merchants are concentrating on less-expensive items, said Norins of Specialty Retail Report, making it somewhat cheaper to stock up on inventory.

Still, the tough economy has taken its toll on would-be owners.

Fewer people are actually signing leasing agreements, said Allison Szabo, a property manager at Provenzano Resources Inc. in Sherman Oaks, which runs the kiosk leasing program at the Third Street Promenade.

Westfield, which operates numerous shopping malls, added several kiosks to the Culver City location when it was renovated recently, including Popcornopolis, Love Is in the Hair and Holiday Haven. Over the last year, said spokeswoman Catharine C. Dickey, interest in renting kiosks at Westfield malls has increased.

Holiday Haven's Maria Barrera signed a three-month lease to sell sequined and feathered, Venetian-style Carnival masks for $14.99 to $49.95. The onetime flower shop owner had been eager to get back into retail and was happy to snap up the mask concept, which is one of several the center leasing staff suggested after rejecting her proposal for a cut-flower kiosk. She's trying to manage the mask business while running another kiosk and working full time for a vision-benefits company.

On her first day, Barrera sold 30 masks. The next day was much quieter. Barrera is unsure how sales will fare, but knows she has to turn a profit soon.

"You have to get enough for rent, merchandise and employees; otherwise, what's the point?" said Barrera, who was making calls to a temporary employment agency to find a worker to staff her sleek kiosk.

Despite the low entry cost, kiosks aren't for everyone. The working conditions can be tough, especially for outdoor kiosk operators. Most specialty leasing managers require merchants to staff their kiosks almost every day of the year for as long as 10 hours a day.

That often means sales have to get off to a fast start so a merchant can afford to hire someone to help. Otherwise the concept is unworkable for many people.

"I need $6,000 [a month] minimum to get by," said Spross, who said she has a business degree from Switzerland.

"Is that worth it? To work 70 hours a week just to get by?"

Her steady start this month is encouraging, she said, considering that October is usually a slow month in the kiosk business and the recession has made it even worse.

"I figure if I survive that I can do anything," Spross said.

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smallbiz@latimes.com

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