Calvano breathes life into discount retail with Dollar Giant.
The incredible true story of Joe Calvano, the golden boy who grabbed life by the tails and bet it all on a dollar store.
This is the implausible story of Joe Calvano, an unemployed 49-year-old who borrowed money to open a little dollar store in Burnaby in 2002, getting his wife to run the cash register. Five years later, Calvano has 55 Dollar Giant stores in five provinces, 1,000 employees and revenues exceeding $70 million – and nothing in any of his stores sells for more than a loonie. Can success like this really happen? Maybe so, if you believe life can be like an over-the-top Hollywood musical. This one might be entitled How to Succeed in Business with Only One Dollar. The curtain rises on a young Calvano hitting the streets in search of employment. It’s 1973 and Calvano has just dropped out of college when he lands a job in the stockroom of a Kresge’s store in Toronto. Kresge’s is a five-and-dime department-store chain: low-end retail. For most people, sweeping floors and schlepping stock would be like starting life in a dead end. Not for the young Calvano. He loves it. He’s earning $80 a week and vows to run the company one day. “It’s a way to learn the business and get paid for it,” Calvano tells me, 34 years later in another stockroom, this one behind his Dollar Giant headquarters on Main Street in Vancouver. Calvano appears fresh-faced, still enthusiastic and surprised by his life. What the musical needs next is the mentor. Enter Sy Cumiskey, Kresge’s VP of personnel. Cumiskey takes a liking to the kid. Tells the stock boy, “That’s how I started. Stick with it, kid. You can really make a career here. Get your own store, you can make $28,000.” Twenty-eight thousand! Calvano couldn’t be more excited if Cumiskey had just proved there’s a Santa. Cumiskey takes Calvano under his wing. The kid gets promoted. Now he’s a trainee in lingerie, learning how to order slips and bras and set up displays. The perk, of course, is that he’s working with all the cute shopgirls. It would make for a better dramatic arc if Calvano were to meet his true love here, but he’s already married. No matter, the kid works hard. The dialogue’s hokey but completely genuine. “I think retail is the best business people can get into,” he says today, just as I’m sure he did back then. “If you’re good at it and make yourself valuable, you’re going to get paid for it.” Before long, Calvano’s promoted to the big store, the giant that owns Kresge’s in Canada: Kmart, the 100,000-square-foot big box. He gets his own department: he’s “domestics” manager, in charge of linens, bed and bath, flowers and housewares. Calvano is climbing, rising through the hierarchy. Today he’s the first to tell you: “You can’t get to the top right away. You have to work at it.” There should be a song about that, something full of optimism – “I Believe in You” or “High Hopes.” Calvano moves up: senior assistant, coordinating department manager, co-manager. Finally, he gets his own store – his very own 6,000-square-foot Kresge’s and $28,000 a year, just as Cumiskey promised. But there’s one catch. The little Kresge’s at Dufferin and Sinclair streets in Toronto was once run by the president of Kresge’s and each of the seven managers who followed in his footsteps failed. When it’s handed over to Calvano, the store is a money loser. Mike Clarke, the feisty president, tells the new boy, “We haven’t had a good manager here since I ran it.” Most first-time managers in the chain are in their late 30s or early 40s. Calvano is 26. It has taken him only four-and-a-half years to climb from stock boy to store manager. It’s a phenomenal rise; Calvano is a golden boy. On his first morning, a lump in his throat, Calvano begins a ritual he will follow throughout his career: he walks the store before staff arrives, planning what needs to be done that day – cleaning up this department, changing displays in that department, re-shelving stock, bringing product in from the stockroom. That first morning, like every morning that follows, Calvano makes a point of visiting every employee as they begin their shift, personally giving them directions for the day. And at the end of the shift, he acknowledges what they’ve accomplished and wishes them goodnight. It is a secret of successful management culled from his Kmart days. “The biggest weakness for most managers is that they think they’re the only ones who know how to do things, and they ignore their employees,” Calvano explains today in the Dollar Giant stockroom. “I don’t try to do everything myself. Everyone who works in the store participates in the store.” Calvano works what he calls his “passion for retail” on the sales floors with customers, learning about what they like. Knowing their preferences, he orders products carefully from head office. In the first year, he turns the store around and makes a profit. By the time he is promoted again a few years later, his little Kresge’s is the most profitable it has ever been. This is where you’d stage a big production number, with lots of dancing and cash registers ringing. [pagebreak] Assigned to co-manage a brand-new Kmart big-box store, Calvano learns automotive, kitchen appliances, men’s wear, ladies’ wear and cafeteria management. Soon he becomes store manager, overseeing 150 employees, still walking the store every morning, chatting with every employee on the floor. If this were a one-act show, this could be its finale: the kid reaches his ultimate retail achievement, but then – a new door opens. Calvano is promoted to buyer. This is when the musical switches from black-and-white to Technicolor. As Calvano tells me, “You become part of the world. You’re not confined to these four little walls; you’re giving the orders.” Literally $60 million in orders: that’s what the new 29-year-old Kmart buyer of men’s and boys’ wear is responsible for in his first year. And, of course, Calvano loves responsibility. “You do your research,” he says, “and your job becomes easier.” Next comes the big montage sequence: Calvano visiting stores from the downtown boutique to the suburban Sears, comparing product, negotiating with buyers, learning how a shirt is made – the cotton, the number of buttons, how they’re sewn on, how many inches apart to place them. “It really taught me about product. You couldn’t buy this kind of education,” he explains. The kid is young. He brings something fresh to the market, not what you’d typically expect from Kmart. He discovers football mesh jerseys are becoming popular, but none of the regular Kmart suppliers have them. Calvano sources a local manufacturer, takes a chance and orders 20,000. They sell out. Sales in his department rise, the margins increase, the kid wins the confidence of his superiors at Kmart, earns his commission bonus and more attention from Mike Clarke. The company president who once ran the little Kresge’s store that Calvano turned around tells him Kmart is buying an Ontario discount chain called Bargain Harold’s: 49 stores, $100 million in sales in 1985. He appoints 32-year-old Calvano its new president and says he wants just one thing in return: for Calvano to triple the profits. Now Calvano gets serious about the discount business. Forget Kmart; as Calvano says, Bargain Harold’s outlets are the really “down-and-dirty discounters.” Little stores, up to 8,000 square feet, huge sales volumes, thin margins, everything from shoes to shampoo. “You have to be smart, fast, really aggressive,” Calvano remembers. “You have so little space. Whatever you bring in has to sell. If it doesn’t sell, you have to get rid of it.” The business model is “in and out.” If something’s in your store longer than a month, you’ve made a mistake – but Calvano doesn’t make many mistakes. In five years, he grows the chain from 49 stores to 150. Sales volumes triple to $300 million, precisely as Clarke ordered. The kid’s no longer a Kmart buyer for men’s and boys’ wear; he’s a company president, rubbing shoulders at New York trade shows, flying high, buying direct in Bangkok, Singapore and Korea. “It’s the most exciting time of my life,” he recalls. In every musical, of course, there’s a big first-act curtain, the moment where the plot changes and the audience is left hanging through the intermission. Kmart flips Bargain Harold’s to a couple of hotshot investors and Calvano is brought back to Kresge’s. He’s Kresge’s new president, but something has changed. Kmart is now closing down the Kresge’s division. Calvano’s job is to “maximize the return.” No more buying – he’s discounting the last of what Kresge’s can’t sell. No more good relationships with the employees – he’s laying them off. Calvano becomes the company’s hit man, the last man standing on what Calvano calls “the dark side of retail.” Worse, his marriage is failing. When the new owners of Bargain Harold’s come to him with an offer of “Whatever you’re making, we’ll double it,” Calvano jumps at the chance. He’s back on the jet, president again, but it’s the ’90s now. Interest rates are high, Bargain Harold’s is highly leveraged, retail businesses in Canada are going into the dumpster and Bargain Harold’s is about to join them. Calvano’s job, once again, is to “maximize the return.” He tries to keep things upbeat. “There’s a silver lining to everything,” he tells me, reciting the phrase he used to keep his spirits high. “Everything’s an education. At least I’ve become an expert on bankruptcies.” [pagebreak] But in truth, Calvano is exhausted, divorced and, following his successful liquidation of Bargain Harold’s, unemployed. You’d have a big song here, something like “What Kind of Fool Am I?” The curtain descends. Act two: it’s a year later and the scene changes. Calvano is now in Vancouver, remarried, grateful that his new wife and 16-year-old son from his previous marriage would leave families and friends behind to join him as he starts anew on the other side of the country. “It really shows you what’s important,” Calvano says, “people who support you.” He has been headhunted for Army & Navy, the chain that calls itself “Canada’s original discount department store,” a retail institution in Western Canada, founded in 1919 by legendary Sam Cohen and now run by a family trust. By 1995 the chain is tired and worn. Once again Calvano presides over a distressed situation, but this time he can use his experience to save the chain, not dismantle it. He is assisted by a new mentor, CEO Garth Kennedy, who relinquishes his presidency to the new hire, and by Graham MacKenzie, a trustee who will later play a remarkable role in Calvano’s story. Calvano’s first tough call is to trim back the operation to a size based on the volume of business being done – management-speak for letting people go. But Calvano does it his way: no emails, no form letters. He personally calls every employee destined to be sacked into his office and explains why the company has to reduce its staff, making an effort to be fair and basing the decisions on seniority. The next step is harder. The store managers have always bought their merchandise autonomously. Calvano discovers the chain is paying eight different prices for the same item. He ends the hubris, instituting head-office buying and incurring the animosity – if not the wrath – of the eight Army & Navy store managers who lose their power to wheel and deal with suppliers. Here we have an opportunity for a good chorus number, featuring eight outraged managers along with a few disgruntled layoffs railing for a return to the good old days. Calvano’s third step is to clear the sales floors of the old, outdated, unmovable merchandise that’s clogging the system like cholesterol in a heart artery. He puts the dead inventory on sale, liquidates it and gives the remainder away to the Salvation Army. “Even though you really can’t afford to buy new merchandise, you have to. If you don’t, you’re going to have a slow death,” he recalls telling Kennedy. In Calvano’s first year, he makes 62 flights across the country, consoling store managers, cajoling suppliers, energizing employees and building a buying team. Soon Army & Navy turns a profit. Not a big one, but the chain is out of its long bath of red ink. Over his next two years, profits increase. Calvano’s passion for retail is back. There’s growth, staff promotion, profits and a buzz that hasn’t been around for a long time. A new character enters the scene. She’s Jacqui Cohen, granddaughter of the chain’s founder – flamboyant, vivacious, headstrong and high-octane, high-society with a reputation for nightlife and recklessness – the diva who typically stops the show. When CEO Garth Kennedy unexpectedly dies of a heart attack, there is a seismic shift in Army & Navy’s board of trustees. Cohen takes control. Her first decision: fire Calvano. In a musical, it would be a dynamic moment, just the place for a stand-and-belt duet – maybe Irving Berlin’s “Anything You Can Do, I Can Do Better!” In real life, who knows? The truth is sealed behind an iron-clad legal agreement that commits both parties to confidentiality. What really was said remains unknown, although in a 1999 BCBusiness interview Cohen, referring to Calvano as the “interim” president, said, “I realized that this was not the man I would be comfortable with taking over my company. So, after coming back from Garth Kennedy’s funeral, I walked into his office and I fired him.” Calvano suggests the process took several months and allows, “It was a disappointment to leave such a wonderful company.” He smiles, long resigned to the loss, adding, “It was Miss Cohen’s company and she had the right to do what she thought appropriate.” Nevertheless, Calvano’s victorious comeback ends. As in every good musical, it’s the darkest-before-the-dawn moment. Where is the resurrection of hope? Calvano’s friends try to help. Max Fugman, the women’s fashion importer who created Jana & Co. in 1966, gives Calvano some consulting work. Headhunters bring offers. But Calvano feels pigeonholed. He’s the retail hit man who knows how to downsize a company. Yes, he knows how to build a tight management group too, but, as he says today, “It was more negative than positive.” He accepts a senior VP position in Vancouver at Superstar, a 70-store high-fashion sports retailer, reporting to Paul Dusanj, Superstar’s president and owner. The chain is in financial distress; that’s why Calvano was hired. His first assignment is to restructure the company, refinance it and cut out a couple of million in overhead, which means he terminates 25 per cent of the head office, a job he hates but knows well. [pagebreak] He manages to turn Shoestring, the chain’s discount division, into a winner. The strategy is to use Shoestring’s cash flow to steady the more upscale Superstar, which can’t locate the high-end market. It’s not radical enough for the hip-hop crowd but not casual enough for the dress-down Friday office workers. Through Shoestring, Calvano and Dusanj keep the chain alive for three more years. The tipping point comes when Superstar pours investment money into a new flagship store at Metropolis in Burnaby, and the only exit is bankruptcy. So is this the end of Calvano, at least in Vancouver? Fugman, his mentor, gives him more consulting work and encourages him to find something here, but Vancouver has very few head offices in retail. Calvano is resigned to returning to Ontario. The headhunters beat the drums and find the next opportunity – in Edmonton. This is the moment when Graham MacKenzie, his old supporter at Army & Navy, re-enters the scene. “Why not open a store of your own?” he asks Calvano. “It would be like going back 30 years,” he considers. Back to the little Kresge’s at Dufferin and Sinclair streets, age 26, half a lifetime ago. MacKenzie offers financial backing. Calvano has always been intrigued by dollar stores, which seem to propagate like fruit flies and die as quickly. What these stores are missing, he thinks, is merchandise that people want to buy. The places are normally full of knick-knacks, party favours and joke products. Nor are they usually pleasant shopping environments – the aisles are narrow and crowded, interiors are badly lit, merchandise is poorly displayed. They’re not even true dollar stores – there are items priced at under or over a dollar. At home with his wife, Judy – the woman who gave up her family and friends to start a new life with him, Calvano admits he has run out of options. “We have a couple of choices,” he says. “We can move or we can open a little store, a dollar store – but you’ll have to work cash.” Judy asks, “Does that mean we can keep our house?” Calvano answers yes. So they do it. Along with MacKenzie, Calvano enlists his brother as an investment partner, and the three become co-investors. Bruno Carchadi, a former Bargain Harold’s buyer who’s now running a discount store in Guelph, Ontario, becomes his buyer; Calvano doesn’t want to repeat the Army & Navy experience of flying across the country to deal with suppliers. Carchadi also brings with him the in-and-out merchandising moxie of the old days, providing Dollar Giant with ever-changing, quickly moving inventory and keeping the stores lively for shoppers, who can visit every week and always find something new. Calvano begins creating his vision of what a dollar store should be: bright, with aisles wide enough to accommodate shopping carts, merchandise organized in departments and, most importantly, filled with everyday items – greeting cards, Band-Aids, plastic containers, toothpaste, salt and pepper, tea and coffee, light bulbs, screwdrivers, mouse-traps, artificial flowers, candles, craft and scrap-booking supplies, and some genuine surprises among the 10,000 items every store carries, such as sunglasses and headphones. And there’s only one price: everything is a dollar. To secure the wholesale prices Dollar Giant needs to succeed within the slimmest margins a retail dollar imposes, Calvano asks for suppliers’ help. Sales representatives such as Coca-Cola’s Sean Dolynski give Dollar Giant volume prices based largely on Calvano’s resumé and enthusiasm. For Dolynski it’s an investment that now yields 2.5 million individual Coke sales annually. Calvano creates loyalty among employees by promoting from within as the chain multiplies exponentially. He offers suppliers the same loyalty: when sign sales rep Randy Siqouin changes firms, Calvano tells him, “I’m dealing with you, not a company.” Siqouin now has the national account. Brenda Dumont of Canadianretail.com, the website on which Dollar Giant advertises for new retail recruits, says of Calvano, “He knows the discount category better than anyone in Canada.” And, Calvano tells me, “I’m having more fun now than I’ve ever had.” In the musical finale, everyone would be singing something uplifting now, and the show would end with Calvano belting – just as he does online on the Canadianretail.com website, just as he did in the stockrooms of both Kresge’s and Dollar Giant – “Retail! It’s the best business you can get into!”