Heirs to more than a century of family experience in retail sales, Rick and David Natelson do not themselves run stores. But they have remained within the retail world by consulting with retail clients, primarily on how to run unusual sales.
These sales, the goal of which is to get rid of excess inventory at a faster pace and lower price than usual, occur outside of the normal retail cycle and may range from an anniversary, moving, or renovation sale to retirement or closing sales. Natelsons plans every detail of these sales, including marketing, financing, and bringing in any extra merchandise necessary to round out the store’s existing inventory for the course of the sale.
After spending 30 years in a 9,000-square-foot space in New Brunswick, Natelsons has moved to 5,000 square feet on Stouts Lane in Monmouth Junction. The larger space in New Brunswick was necessary when the company maintained its own inventory for its clients to use during sales. Excess merchandise remaining after a sale would be sold at the warehouse store at this site, open four days a week. Once Natelsons decided its business would run more efficiently without maintaining its own inventory, the company needed less space and also fewer employees. In New Brunswick Natelsons had 17 full-time employees at its height, whereas today it has only five.
Because the promotional events Natelsons consults on are out of the ordinary, individual stores usually do not have the experience they need to figure out what type of event is appropriate or how to merchandise, advertise, and run it. “Our job is to merchandise and appraise the inventory properly so the store can get out of its worst goods and not out of its best goods — to maximize their recovery,” says Rick Natelson.
To drive significant business during a sale, the store will need to supplement its inventory to fill any gaps. The merchandise must be from the current season and of comparable quality and fashion, but at a price below wholesale, and the Natelsons are able to provide this off-price inventory. .
At the same time Natelsons is able to provide the credit these stressed stores often need to obtain this inventory. “This merchandise is typically billed to us and resold by us to the client stores as they sell it to the consumer,” David says. “By keeping close controls and settling up weekly, we are comfortable extending these terms to stores that may not have the necessary credit to buy directly from the wholesaler.” When the sale is over, the merchants can return any unsold inventory to Natelsons.
Even clients who are financially able to support a sales event are not necessarily able to project sales and hence required inventory correctly. “We know certain common demographics, and we can project the volume capacity of an event,” says David. And Rick adds, “If the owner buys the merchandise himself and those sales don’t come in, all his profits will be tied up with his inventory, and he will have more inventory after the sale.” Any remaining inventory would have to be marked down at a loss.
The different types of sales also need to vary in their themes, tone, and messages, which usually become more intense the more desperate the retailer is to dispose of inventory. An anniversary sale, for example, would have a much different look to the consumer in terms of marketing, advertising, and signage than a going-out-of-business sale. “It’s like a play,” says Rick. “If you have a certain theme, you have certain props.”
In the original setup of the company, any unused merchandise would go to the company’s warehouse and be sold cheaply in the store. But eventually that store had problems typical of those experienced by Natelsons’ retail clients. “The problem was, in order to run an effective warehouse store, you can’t just use the inventory that comes back from the stores you are working with,” says David. “The same way they needed merchandise, we had to add merchandise to make our store attractive.” The result was a heavy investment in inventory for the warehouse store that was not very profitable.
Once they decided to close the retail outlet, Natelsons worked harder to minimize what comes back. They would sometimes sell leftover merchandise at promotional events run jointly with other retailers or, if worse comes to worst, they will find a bulk buyer.
A small part of the firm’s business is more standard consulting with firms on retail issues like merchandising and maintaining inventories.
The earliest Natelson logo hung on their great-great-grandmother’s children’s store in Elizabethport in 1888. By 1923 it had found its way to Natelson Brothers, a chain of eight high-end men’s stores opened by six brothers in the tri-state area. At its height the chain had two stores in Connecticut, one in New York, and five in New Jersey.
The transition away from the high-end stores began during the 1970s when the youngest of the brothers and manager of the Elizabeth store, Reuben Natelson, did a few deals on the side with a couple of his brothers to help businesses run promotional sales. In 1980, when Rick came on the scene, he, Reuben, and a third partner with expertise in promotional sales created a division within Natelson Brothers called Rubaine, after Reuben’s Hebrew name.
Starting in the 1970s changes in the retail marketplace were beginning to affect the company’s eight small stores as they were other downtown retailers. “The whole retail climate started to change dramatically,” says Rick. Malls and discounters were coming on the scene, demographics were changing, and shopping habits were different. The Newark and White Plains stores had to close in the 1970s, and the others were to follow over the next decade and a half.
“The writing was on the wall that the future was more in the consulting world,” says David. Through the parent company, the new consulting division was able to link up with other menswear wholesale companies who generated leads to their eventual clients, and it was able to close deals and get credit to buy merchandise based on the parent company’s reputation.
As a result, says David, “the consulting business grew, and the stores plateaued to the point where the subsidiary eventually cannibalized the parent.” The Livingston store closed around 1984, and between about 1988 and 1992, the last five stores closed: Elizabeth; New Brunswick, run by Rick’s father Bert; Stamford and Fairfield, Connecticut; and Red Bank, run by David’s father Bud. In about January 1989, Rick and David spun off the division and became owners of Natelsons, its own separate entity.
The closure of all the retail stores, however, brought Rick and David to a critical juncture where they made a serious mistake. “We believed our growth could be elastic by dedicating other family resources to this family business,” says David.
Although the consulting company did absorb many of the family members who had worked in the stores, as the retail climate worsened, fewer stores meant a diminishing need for consultants. By the late 1990s the company was burdened by the extra overhead as growth had leveled out, and Rick and David had to make the difficult decision to downsize from about 15 fulltime employees to the current nucleus of five. With only five in their office, Natelsons is doing a little more outsourcing and taking on some itinerant help, but mostly the remaining employees have had to increase their productivity. “Like many business in downsizing mode,” says Rick, “it’s amazing how much we can still do with less.”
Rick noted that the types of problems they encountered are common in any business with family. “You have emotions and ties that are beyond business, and you don’t always make the most rational choices when family is involved,” he says. “One of the dilemmas families have to cope with is that, when times change, in a business every member has to be accountable for themselves.”
The firm has consistently worked with 20 to 25 clients a year. From the 1990s through 2003 it had a string of business in central New Jersey, including the now-closed English Shop in Princeton; Alan Royce, a men’s store on Nassau Street in Princeton, whose owner Alan Haines came to work with the Natelsons a few years later and is still one of their five key employees; Harry Ballot in Princeton; a liquidation sale in an abandoned storefront on Nassau Street for a catalog company based in Ohio; Landau’s; Country Kids at the Princeton Shopping Center; Stacy, a women’s specialty store in the Lawrence Shopping Center; and the Clothing Company, a men’s store on Route 33 in Mercerville.
Rick graduated from Syracuse University in 1973, where he majored in economics, and then moved on to Rutgers School of Law in Camden, which he completed in 1976. “I was the one who swore never to go into retail because I hated it when I was young,” Rick says. He worked in tax accounting and tax law for about four years, for Seidman & Seidman, and then for CBS. In 1980 he moved into retail consulting with the family company subsidiary. “When I looked into the new concept, it intrigued me, and the idea of getting back from corporate America into one’s own business, particularly an exciting business as this, was giving me enough of an impetus to shift gears and change careers,” he says. Rick raised his family in Manalapan and now lives in Plainsboro.
David was a psychology major at Yale, from which he graduated in 1975. His first job was with the Abraham & Strauss department store, which he left four years later to work in the regular Natelson stores. Four years later Rick drafted him to join him in the subsidiary. “The company decided it made sense to dedicate young assets to the consulting business,” said David. “It was an admission on the part of the older generation that the future was this.”
David raised his family in West Windsor, where he lived from 1986 to 2007, before he sold his house and moved back to his childhood neighborhood in Monmouth County, near the beach, where he and his wife grew up.
In one sense Rick and David Natelson are the remnants of a once-flourishing family business, and they only survived by adjusting their business to the current marketplace. “Our business had to adapt to survive,” says Rick. “We came into different ways of making money and transitioned out of retail into a service-oriented business.”
David adds, “The irony of it is that what we do now is coach or counsel other retailers whose stores are going out of business, moving locations, or can’t pay their bills and need a financial shot in the arm. They hire us to coach them through these events.”
#b#Natelsons#/b#, 45 Stouts Lane, Suite 1, Monmouth Junction 08852; 732-355-1440; fax, 732-355-1445. Rick Natelson, manager. Home page: www.natelsons.com