Ollie’s hitting 100

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Since 2003, Ollie’s has maintained its long-term strategy of 15- to 20-percent annual store count growth, he said.

“This has all been very, very planned out,” he said.

Ollie’s bills itself as “the mid-Atlantic’s largest retailer of closeout, surplus and salvage merchandise,” operating under the straightforward slogan, “Good Stuff Cheap!” Patrons can expect a little bit of everything, all of it low-priced, some of it exceptionally so.
An April flier offered deals on items as disparate as Pergo laminate flooring, lawn fertilizer, matched luggage sets and tubs of chlorine for swimming pools.

Major sales categories for Ollie’s include carpeting and flooring, housewares, hardware and books, said retail expert Anthony Liuzzo, director of the MBA program at the Sidhu School of Business and Leadership at Wilkes University.

Four partners, including Butler, founded Ollie’s in 1982. The first store near Mechanicsburg is still going strong at its original location, Butler said.

Ollie’s had 26 stores in 2003 when it partnered with Greenwich, Conn.-based private equity firm Saunders, Karp & Megrue, now Karp Reilly. That’s when today’s expansion strategy was mapped out, Butler said.

Ollie’s is funding its expansion with internally generated cash flow, Butler said. It has a line of credit with M&T Bank, but that is used primarily to finance inventory, he said.
The company has made the Business Journal’s “Top 50 Fastest Growing Companies” 10 times, including every year from 2004 onward.

To accommodate its expansion, Ollie’s had to upgrade its distribution network. Last year, the company consolidated several smaller warehouse operations into a state-of-the-art 603,000-square-foot facility in East Manchester Township, York County.

The move improved efficiency, contributing to the cost control that is vital to any business, Butler said.

“My automation allows me to service more stores and leverage existing staff,” he said.

It hasn’t hurt to be headquartered in a key Mid-Atlantic distribution hub, he added.

“It seems everybody comes to Central Pennsylvania on the logistics side nowadays,” he said.

Deep-discount retailers “did phenomenally well” in the recent recession and afterward, said Daniel Butler, vice president of retail operations for the National Retail Federation and no relation to Mark Butler.

There’s no doubt the tough economy has caused more middle-class and upper-middle-class shoppers to give Ollie’s a try, Mark Butler said.

“They’ve been squeezed and they need to find ways to save money,” he said.

The recession also improved Ollie’s access to stock, as more retailers looked to improve their cash position by unloading inventory, he said.

“If you want to turn your inventory into cash, we’re the guys for you,” he said.

Ollie’s isn’t a straight-up discounter, liquidator or surplus store — it’s a hybrid, which helps set it apart from other companies in its market segment, the NRF’s Butler said.

“They look for stuff that’s cool and different and new,” he said.

Today, high gas prices have hurt consumers’ psyches and provided a fresh reason to patronize discount retailers, Liuzzo said.

However, the effect cuts both ways, Ollie’s president said.

“A $4 gas price affects every segment of the American consumer. That’s taking expendable income out of every possible customer’s pocket,” Mark Butler said.

Though developers often call with proposals for far-flung locations, Butler said he ignores them. Ollie’s is committed to disciplined, contiguous growth, he said.

A store map bears that out: Ollie’s has yet to enter a state north of New York, west of Kentucky or south of North Carolina. (The company will enter Tennessee and South Carolina this year, Butler said.)

Ollie’s stays lean in every aspect of its cost structure, Butler said.

“I do my leases like I do my deals on the goods,” he said. “We’re cheap.”

That said, Ollie’s knows that deals have to be good for both parties for business relationships to flourish, he said.

For employees, Ollie’s offers a rate of growth that is rare among retailers, Butler said. For those seeking to leverage a job into a career, “that’s very, very appealing,” he said.

The company’s human resources coordinator, Vikki Pannebakker, began at Ollie’s five years ago as a part-time warehouse packer shortly after completing a psychology degree. She now puts her schooling to use on a regular basis, she said.

The company keeps an eye out for people with backgrounds and skills that show promise, she said — people that other companies might turn down as overqualified or inappropriate for particular kinds of work.

“We’re a big business, but I think we try to keep our small-business attitude,” she said.

Why Ollie’s isn’t Mort’s

Ollie’s Bargain Outlet Inc. is named after co-founder Ollie Rosenberg, yet according to the company’s website, its founding father was someone else — Mort Bernstein.

Ollie’s early history accounts for that, company President Mark Butler said.

Butler was in his early 20s when he, Bernstein, Rosenberg and Harry Coverman founded Ollie’s in 1982.

The store was named for Rosenberg because he was the principal investor, but it was Bernstein and Butler who handled day-to-day operations, Butler said.

The other three men were a generation older than Butler, and have since passed away, he said.

Bernstein was an extraordinary mentor, Butler said, calling him “a brilliant merchant and a brilliant teacher.”

As for the goofy caricature of Rosenberg that remains the store’s mascot to this day, it’s spot-on, Butler said.

“He was as much a character as that caricature.”