You’re the Boss: The (Pipe) Dream of Opening our Own Retail Stores

Courtesy of TerraCycle.TerraCycle’s now-closed retail outlet in the Port Authority building.

Sustainable Profits

The challenges of a waste-recycling business.

Since the inception of TerraCycle, I have dreamed of having our own chain of retail stores. Instead, we have always relied on stores like Wal-Mart and Whole Foods to sell our products. In the last decade, even as we shifted from selling home-and-garden products to selling a wide range of consumer products, and even as we shifted from manufacturing all our products to licensing them to assorted manufacturers, we’ve continued to sell most of our stuff through big-box retailers.

But throughout this time, I have continued to believe that we could create a profitable model of a TerraCycle retail store that would be unique and highly scalable. Ideally, consumers could bring their waste to the store (as if it were a recycling center), get paid for it with cash or store credit, and buy products made from waste. We now have more than 1,000 recycled and upcycled products: fertilizer, fire logs, backpacks, kites. No other retailer out there does anything like this. If we could create a successful model, I’m confident we could franchise it and develop it quickly.

So far, however, we have made three attempts at retail, and we have failed three times. The first attempt came from a friend of mine, who runs a chain of restaurants in New York called Rice. He took a lease on a shop in the Red Hook neighborhood in Brooklyn and dedicated the space exclusively to TerraCycle merchandise. Unfortunately, the sales failed to cover his costs, and the store folded after a little more than six months.

Our second attempt was a pop-up store that the Port Authority of New York and New Jersey gave us for three months in 2010. It was in the Port Authority building on Eighth Avenue. Even though the store was large and in a well-trafficked location, and even though the rent was free, we barely made a profit.

The third attempt was our most successful. We were allowed rent-free access to a storefront in Princeton, N.J., which had a high-end retail environment with furniture boutiques, jewelry stores and restaurants. Once again, even though the rent was free, we produced only a modest profit. The store was open for almost a year and a half but we recently closed it.

In none of the three cases were we able to create a business unit that could stand on it’s own. Perhaps the locations were not ideal. Maybe this was a time when we should have tried advertising or approached retail consultants to develop a strategy in line with our larger business model — two steps I have long been disinclined to take. Red Hook is hip, but it doesn’t have a lot of foot traffic yet. Port Authority has plenty of foot traffic, but its clientele may be more interested in getting on a bus than in looking to shop. And Princeton has people who are ready to shop, but perhaps they are looking for high-end items and not low-cost products made from waste. The other major problem, I suspect, is that our products don’t fit neatly into a retail niche. They just may be better suited for big box retail: high volume at low prices.

Given these experiences, my next idea for a retail play is to combine three models, encouraging people to bring in their waste (to generate foot traffic), giving them the opportunity to buy the random assortment of low price TerraCycle products, and also focusing more on bringing in an array of designers and vendors to sell products made from waste on consignment. Perhaps that third element will allow us to develop a model that works. All we need now is someone to give us free space to test this experiment.

What do you think? Any suggestions?

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

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