← Making It with Jon Davids
Making It with Jon Davids
226 - He built a $6B business by blowing up one shelf | the story of Hobby Lobby
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This is David. He sells art supplies. And last year he made $6 billion doing it. I'm going to tell you exactly what happened, and I'll give you four killer strategies you can copy and paste into your business. Add some extra juice to whatever you do. My name's John Davids. I've made millions using tactics just like the ones I'm going to share here. And I make videos like this because I believe business builders like us make the world go round. I just want to help foreign. You're listening to Making it with John Davids. So rewind to 1972. David's working as a store manager, selling all the basics. Soap, chocolate, magazines. But he's noticing something kind of funny. The craft supplies are getting dumped in the back aisle. Glue, paint, yarn. They're an afterthought. Yet the people who buy this stuff are super loyal. If they buy beads once, you're pretty sure they'll come back to buy beads over and over again. And this gives David a big idea. Why not dedicate a whole store to the craft aisle? It's a simple concept, but it's never been done. So David quits his job and gets to work. He leases a small space and fills it with paintbrushes, glue guns, all kinds of fabrics. And then he slaps a sign on the front door that says hobby Lobby. And crafters love this place. Word spreads fast, and in year one, sales hit $40,000. Not bad for a tiny little store in 1972. But David's got bigger plans. So fast Forward now to 1975. Business is good, and our boy wants to triple down. So he opens store number two. This time, it's way bigger. Now craft lovers can get whatever they need in a store the size of a Walmart. It's a hit, so he keeps on building. Within a decade, he's doing 10 million bucks in sales. Then it's 100 million. Today, Hobby Lobby has over 1,000 stores that do billions in sales. David owns them all. He bootstrapped it all because he blew up the craft aisle. This episode is brought to you by my Playbook social media selling machine, available right now@johndavids.com playbook. Let's be real. You don't want likes. You want sales. You want to know that customers are going to show up every day from the content you're already posting. This Playbook shows you how that's done, how to turn social posts into cash flow, and how to scale in a way that's simple, repeatable, and on brand. Grab it free right now@johndavids.com Playbook. That's johndavids.com playbook. You know, this story is all about a classic business hack which David used to build a huge company. He took one shelf in the general store and made it the whole store super, serving one customer over and over again. And that takes me to my first big. Every shelf in a store could be its own store. If you look around the retail world today, you'll see this play everywhere. We call them specialty stores. You've got Home Depot, petsmart, Sephora, Bass Pro Shops, Guitar center, the list goes on. And these are all big players who started by zooming in on a single shelf. Look at Home Depot. They come along in 1979. And before that, if you wanted to buy hardware or building supplies, you'd go to stores with names like Sears and Montgomery Ward. If you wanted wood, you go to a lumberyard to grab that. And so the founders of Home Depot, Bernie Marcus and Arthur Blank, see this and decide this should be its own store. Absolutely crazy idea. And it worked. That first Home Depot store opens in Georgia. And by the end of the first year, Home Depot hits $7 million in sales in 2024, is just shy of 160 billion in sales. One of the biggest retailers in the whole world. And you can look at Petsmart too. Same play, different aisle. So it's the late 1980s, and back then, if you needed to buy pet food, you'd grab it at the grocery store. There's one lonely shelf wedged between the Mr. Clean detergent and the Bounty paper towels. Maybe there's a few bags of Purina or Iams, a couple chew toys. That's it. That's the entire pet category. And it's treated like an afterthought, just like craft supplies were. And then two entrepreneurs, Jim and Janice Doherty, see something everyone else misses. They notice how people are starting to treat their pets not just like animals, but like family. And they realize this isn't just a grocery store errand. Buying pet food is kind of an emotional purchase. So they do the unthinkable. They take that one shelf and they turn it into the whole store. It's not that unthinkable. Cause you guys thought about it too. That first store opens in 1987 in Phoenix, Arizona. It's actually called Pet Food Warehouse at the beginning. And the concept is simple. A massive warehouse dedicated entirely to pets food. Stacked floor to ceiling aisles for dogs, cats, fish, birds, reptiles, you name it. They even build in services like grooming and training because it's not just about a shopping trip anymore. It's an experience for pet owners. A place where they can come together. And a lot of people don't get it at first at all. Like, why do you need that many options of dog food? Well, you know, who needs that many options of dog food? People who love their dogs. And there's a lot of them. So pet food warehouse scales fast, turns into a community hub. You got families bringing in their dogs for grooming, kids picking out fish tanks, rescues running adoption weekends. And in 1989, they change their name to Petsmart. They go public, sales hit billions of dollars, and pet retail becomes its own category. Guys, you'll see similar stories everywhere. And by the way, it's not just in physical retail. Go to any category on Craigslist or ebay or Facebook Marketplace, any of those blue links that take you to a subtopic. And that subtopic could be its own marketplace. Double click into the automotive section. You've got bring a trailer Cargurus. To tap into real estate, you've got Zillow and Airbnb. You get the idea. If you're looking to expand your current business or if you're starting from scratch, remember, every shelf in a store could be a store of its own. And that brings me to another really important part of the Hobby Lobby playbook. Build habits, not hype. When you focus on a single customer and when you really understand their lifestyle, you can design your product around their habits, around things they do and things they need all the time. You're not begging them to buy your stuff. Your stuff becomes something they choose to buy on a regular basis. They need it, and they keep coming back for it. Hobby Lobby runs on a rhythm. Every crafter, every teacher, every decorator has a cycle. There's the weekend project, there's the midweek supply run. The one thing you forgot that sends you back over and over again. The hot glue gun, the glue sticks, the ribbon, the paint, the sparkles. And the aisles literally evolve throughout the year. You got the Christmas season, then there's wedding season, there's back to school season, there's Halloween. You don't even really need to market this stuff to bring people back into the store. Now, in reality, you do market because the space gets competitive and you don't wanna let your competitors steal the business. But the habit does a lot of the heavy lifting. Just. Just walk through a Hobby Lobby on a random Tuesday and you'll see it. People aren't rushing in because they saw a promotion or a flyer. They're there because it's what they do. It's part of their ritual for the week. It's muscle memory. You see the same thing at a place like Sephora, which built an entire store around the beauty counter. If you need moisturizer or serums or mascara, you go back again and again. It's a habit. One of the best players is Bass Pro Shops, a business built entirely around the rugged outdoors. Fishing, hunting, camping. Every customer has their own calendar, and before every trip, there's a stop at the Bass Pro shop. So the question here is, how do you build habits in your customer? Well, you start by figuring out what they do over and over again. Not what they buy once in a while, but what's part of their natural rhythm. Because habits already exist, you don't need to create them. You need to plug into them. So let's go back to the Hobby Lobby example again. People don't wake up in the morning one day and decide to start crafting out of nowhere. They're already doing it. So the job of Hobby Lobby is to just be the supplier of choice for that habit. And when they come in to buy that one thing they need, you sell them a lot of other stuff. That's the power of merchandising, upselling, cross selling, bundling, packaging. And this might sound like a strategy reserved for super niche stores, but it's not. Here's a little sauce for all you business builders out there. We do this for clients all the time at Influicity. Check this out. Look at a grocery store. It's the best example, because everyone goes to a grocery store. Albertsons, Kroger, Whole Foods, Aldi. Wherever you go, they know that people are coming in all the time for a few things. Milk, eggs, maybe chicken, peanut butter. The staples. So they draw you in with those staples, right? That's the habit. And then once you're inside the store, they sell you all kinds of other stuff. It's the same thing. They're tapping into your habits. They know you're coming in, so they're ready for it. They promote it. And then they sell you all kinds of other things. So in your business, ask yourself, what's the thing your customer already does? And every week, every month, every day, what do they need? How can you make that moment easier, faster, better, more enjoyable? Because that's where the habits hide. Never try to change behavior. That's the worst thing you can do. Leave that to the amateurs who aren't listening to your boy. J.D. build a business that fits into existing behaviors. Habits, not hype. All right, can we talk about something? Hobby Lobby does beautifully, and it's one of the best business growth hacks to have in your arsenal. Here it is. Don't reinvent, reframe. People talk about innovation like it's this big act of genius, but that's usually not how it happens at all. In fact, the real breakthroughs in business are almost always putting a new spin on an old idea. It's a reframe. So our boy David at Hobby Lobby didn't invent crafts, he didn't invent stores, he didn't invent the idea of selling crafts in stores, and he didn't create his own kind of yarn. He didn't create his own kind of glue or paint. Homeboy didn't do any of those things. They existed for a long time before Hobby Lobby ever opened its doors. David just reframed them. He said, crafting isn't a side aisle. It's a lifestyle. And then he built a business around that. That, my friends, is innovation. And it's real innovation. Don't reinvent, reframe. You see the same play in so many great companies. You know, there's a business called Oatly, which actually did invent oat milk back in the 1990s. This Swedish food scientist, Ricard Oste. I'm probably butchering that name, but Ricard Oste develops the process for making milk from oats, and that's actually a real invention. But inventing oat milk is not what made this business successful at all. Had nothing to do with it. Oatly hits the store shelves in the 1990s, and for years, it just sits in the alternative milk section of the store, a space that kind of feels like a medical necessity. And so in those early days of Oatly, you drink oat milk if you're lactose intolerant or if you're vegan. It's not cool, it's not aspirational, and it's definitely not a good business. Then in 2016, they. They drop Oatly Barista Edition, which is oat milk designed to go into your coffee, and all of a sudden, it's cool. They reframe the product, a better kind of milk, and make it something people actually want to buy. So think about this for a second. These guys actually did invent something. They invented oat milk. But that had nothing to do with the ultimate success of the company, which was in reframing the product. That's why this business took off. Does hundreds of millions of dollars in Sales today. Another great example of reframing is Lululemon. So yoga pants have existed for a very long time, way before lululemon was a thing. But they reframed this kind of clothing as athleisure. They made it feel premium enough that you want to wear it all day. That's what reframing does. It takes something that already exists and gives it a new meaning, a new place in the customer's mind. Hobby Lobby does it with crafts. Oatly does it with milk. Lululemon does it with clothing. And all of them prove the same point. You don't have to invent something new. You have to frame it in a way that matters. Don't reinvent, reframe. So how do you do this in your business? Well, you start by asking a few simple questions. One, what already exists in your world that people overlook? Maybe it's a product that's treated like a commodity, something people buy on autopilot. So ask yourself, what emotion lives underneath that purchase? What does it actually mean to them? Second, what moment of life does this product belong to? What moment? Maybe people are thinking about your product in one part of their day, and you reframe it for another part of the day, another ritual. Kind of like oatly did with coffee. And three, what story haven't people heard yet? Lululemon could have said we make yoga pants, but instead they said we make clothes for people who move all day, every day. A few words change the entire perception. Quick break. So I can tell you about Influicity. That's the little marketing agency I started in my apartment about 10 years ago. Well, fast forward. It is not so little anymore. Influicity works with some of the biggest brands in the world, building customer communities that drive revenue. We do this through influencers, podcasts, paid media, social media, content, AI and so much more. You can learn more@influicity.com and hey, while you're there, check out our case studies. We have a lot of them. That's influicity.com. okay, guys, now let's get to the Mac Daddy of it. All right? I save all the best juice for last. All juice, no pulp. You know how I do it. You know, all these companies have one thing in common. Have you figured it out? Every business I've mentioned so far, they do one thing. They expand the market. So for all my business nerd friends out there, you'll know the phrase tam Total addressable market. I was talking about this with Harley, the president of Shopify. A little While back, maybe you guys saw that episode and. And Harley made this exact point too. It's a very silly thing to look at an industry and assume that the market can't grow, that it's a fixed size. It's not gonna get any bigger tomorrow than it is today. See, when you build a business right, you expand the market. So remember when I said that Home depot opened in 1979 and made $7 million in their first year? Well, there's a little part of the story that I left out. Check this out. You see, Home Depot didn't just say, let's build a hardware store for hardware professionals. They said, let's build a hardware store for everyone. Yes, you can shop here if you're a builder or a plumber or a contractor, of course. But if you're a dude who just wants to fix his porch on the weekend, you can shop here too. And that dude wasn't being served by anyone before Home Depot. If you're a mom who wants to put up new blinds in the family room, you can mosey on in to Home Depot. Grab those blinds, no problem, guys. This didn't exist before, guys. Hobby Lobby created a new category of buyers because people who were never really exposed to crafts before all of a sudden see crafts and they decide, I kind of like crafting. Oatly doesn't just sell into people who like oat milk. They. They create new people who have never heard of oat milk, and all of a sudden say, hey, I kind of like oat milk in my coffee. I'm one of those people. I remember walking into a coffee shop back in, like 2017, seeing oat milk, saying, what the heck is this? And all of a sudden, they created a new customer. I mentioned Shopify. When I talked to Harley, who runs Shopify back on episode 202, he said himself that Shopify succeeded not because they just sold e comm software to. To companies running e Comm stores, but they created an entire ecosystem of people who are now able to spin up their own e Comm stores. They never would have done it in the past, so they've actually expanded the market by an insane amount. Never believe the fallacy of TAM Total addressable market. Markets expand, they grow. And great businesses, big and small, your multinational companies and your local stores who really super serve their customer will naturally bring in a whole new bunch of customers. They expand the market. That's how you build a great business. Get my best stuff to your inbox@johndavids.com and go build something great. This episode is brought to you by my Playbook website selling machine, available right now@johndavids.com playbook. Most companies want websites that look nice, but a lot of nice looking websites don't sell. What you really want is a website that grabs attention, builds trust, and turns visitors into buyers while you sleep. That's what this Playbook gives you. Based on 10 years of work we've done at Influicity optimizing websites for 7, 8 and 9 figure brands. Download the Playbook now at johndavids.com playbook that's johndavids.com Playbook.