The Stationers Guild

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