Blue Tulip Files for Bankruptcy Protection
The Boston Hearld reported that Blue Tulip filed for bankruptcy protection on January 5, 2009. Highland Capital Partners is reported to own 44% of the New Jersey-based company, which operated about two dozen gifts stores in the northeast and employed 400. Highland’s investment in Blue Tulip was apparently the brain-child of Tom Stemberg, the former CEO of Staples and now a General Partner at Highland Partners.
Three years ago, I remember listening to Mr. Stemberg describe on CNBC how Blue Tulip was going to reenergize the stationery and gift boutique industry by building a series of template-based model stores staffed by well-trained professionals. As an experieced stationer I couldn’t imagine how the “Staples-model” could be applied to our industry, but when someone of Mr. Stemberg’s stature is willing to risk the firm’s capital and that of its investors in a new venture it is wise to take notice.
While Highland Capital Partners will no doubt cite the recession and weak holiday sales as the primary factors behind the demise of Blue Tulip, I suspect it was a flawed business model. As we have seen many times in our industry, investors believe that they can clone a successful store model and replicate that store or franchise it across a wide geography.
The fatal flaw is that Mr. Stemberg and its investors cannot clone the management and entrepreneurship that made the model store so successful in the first place. Blue Tulip, like most chain stores, is driven by product sales and not service. You are either have a well differentiated brand for which you can charge a premium or you become the low-cost producer. Blue Tulip’s products were no different than you would find in any gift store and it didn’t have the economies of scale to become the low-cost producer.
In the case of fine stationery, independent store owners are the catalyst that provides the client with a meaningful shopping experience. Entrepreneurship and service quality are the hallmarks of successful stationers. These intangibles are practically impossible to replicate in a corporate model which is generally structured by-the-book and where most purchasing decisions are made by headquarters. The spontaneity and creativity is removed from the equation and, as such, store managers will spend more time looking for corporate guidance than seeing how they can serve their clients more effectively.
I suspect that Blue Tulip is just the first of several chain stores in the stationery and gift industry that have discovered that their business models are seriously flawed and will need to take urgent action to right-the-boat.
Richard May
Founding Member
January 9th, 2009 at 4:21 pm
What a fabulous article; I enjoyed it very much.
By reading your comments, you probably own and run a very successful and differentiated premium-service fine stationery store. And you are probably right that in the past investors have not been successful in cloning a successful fine-stationary store model and replicating that store or franchise across a wide geography.
At our company, we use Michael E. Porter’s ideas and five forces methodology to analysis the top 10,000 industries, including station stores, and we find many similar business models work in totally different industries.
Ironically, after reading your article about why a “Staples-model” couldn’t work, you might want to reconsider and be the first nationwide fine stationary chain because you nailed the reasons why previous attempts haven’t worked. Although your nationwide chain might enjoy some economies of scale in purchasing, your competitive advantage should derive specifically from your ability to “clone the management and entrepreneurship” which you mentioned are the critical success factors. In short, all hiring, training, compensation plans, and everything else should reinforce the unique differentiated experience you probably provide now.
Cheers,
Alan S. Michaels, President, eCompetitors.com
December 7th, 2009 at 9:03 pm
I purchased many items from Blue Tulip in the Atlas Park. So sorry to see them go. I admired a baby invitation that I did not need THEN but would love now that my daughter is having a baby. It was a peapot in a bathtub with the shower and I believe a little sparkle in it. I did purchase her engagement invitations and many other things from Blue Tulip. I’m wondering if you can tell me the brand name of these invitations. Thank you.
December 8th, 2009 at 5:46 am
Hi Jeanette. Don’t have an easy answer. I believe that Blue Tulip had several proprietary lines that were made for them by third parties. The baby announcement you describe could have come from any number of companies. Stacey Claire Boyd and Sweet Pea come to mind, but I strongly suggest that you use the store locator in the Stationers Guild website to find a store near you that carries baby announcements.