Hitting the bullseye

A passel of investors from Manitoba are hoping they have hit a bullseye with their latest project.

“We figured it out pretty quickly, over a beer at the local curling rink,” says Wilf Germondsey, a Winnipeg insurance broker. “We were shooting the breeze about new ideas for franchises, retail stores, fast food joints and such like. The guy on my left had just come up with this crazy idea about a specialty restaurant to sell organ meats—you know, liver, kidneys, offal —and I thought to myself, ‘you know, Wilf, I said, that’s not a bad idea at all. You’d better either top it or shut up.’

“So I asked myself, ‘What do we have in Canada that they don’t have in the States?’ And the first thing that popped into my head was the toonie. The second thing was that our dollar’s at the bottom of the tank against the US dollar. So I said, ‘how about a chain of stores that prices everything at two dollars and sources everything in Canada?’ And you know what? It beat out the organ meats idea. Although not by a lot.”

So, with the encouragement of his curling friends, Germondsey set about making his business plan. And it all came together much more quickly than he anticipated.

The first thing he learned was that the two dollar bill is, in fact, legal tender in the US, although it is rarely circulated. However, the two dollar coin is uniquely Canadian. As a result, he thought the two dollar concept held water. It was Canadian, yet for US purposes, it wasn’t funny money.

Next, Germondsey took a closer look at the importance of the exchange rate. “With the Canadian dollar so low against the US dollar, our labour costs were going to be high. Thank goodness for low minimum wage laws: Minnesota’s, for example, is only eight bucks an hour. But offsetting that, so long as we had everything sourced in Canada, our inventory would be cheaper than anyone else’s. Even if other stores get their stuff from China.”

So what will the inventory look like?

“We’re going with the Canadian theme, of course,” Germondsey explains. ‘“We expect our best seller to be this bag full of hockey pucks—for two bucks, of course. The number we put in there will change every week as the exchange rate changes. We’ll also stock a lot of curling brooms and rocks. And there’ll be higher end stuff as well. There’s a sofa, loveseat and rocker combo set that sells in Canada for as much as $699. With the exchange rate, we can still sell it here for two bucks and make money. So long as the Canadian dollar keeps going down.”

One source of inventory that Germondsey confirmed to me with the wink of an eye—provided I promised not to tell anyone, which I won’t—is the massive final inventory clearout sales from a certain US retailer that made a big splash here in Canada with its recent opening and then realized it was years away from breaking even. “We’ll have secret shoppers in about 200 stores, cleaning it all out,” he said. “At least they won’t be able to knock our product quality,” he jokes.

“Next, we figured out we had to go big or go home. As luck would have it, there was a dollar store chain selling out its northern and midwestern state leases at a fire sale rate, so we picked up a bunch of them all the way from Washington, Idaho, Montana and North Dakota to Illinois, Minnesota and Michigan—all relatively close to Canada to keep shipping costs low. Canadians will be lured across the border to the shops by special ‘one toonie at par’ promotions. If I know Canadian shoppers, they’re stronger on the lure of a bargain than the economics of one,”says Germondsey.

But Germondsey experienced his biggest rush when he tried to figure out what to call the store. “It struck me that a bullseye is even more precise than a target: if you hit the bullseye, you’ve always hit the target, but you can miss the bullseye and still hit the target. So Bullseye it was. And our slogan just wrote itself: Don’t settle for the target—hit the Bullseye!”

Startup financing was no problem either. “The curling club guys put up half, and the other half came from the Manitoba School Crossing Guards Retirement Fund Investment Board, the largest pension fund in Manitoba. These guys were just itching for something to invest in. We didn’t even have to audition for Dragons’ Den,” says Germondsey.

But what if the stores don’t catch on? “Well, we’ll just pull the plug on everything all of a sudden,” says Germondsey. “I hear it’s been done before.”

And if the Canadian dollar rises against the US dollar? “Yeah, and pigs begin to take flying lessons,” he replied. “Well, there’s always that organ meats franchise idea to fall back on.”

dsimmonds@wellingtontimes.ca