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Retail rebel behind new tea-shop chain sees value in unlikely things — such as his mother’s doubts

Retail rebel behind new tea-shop chain sees value in unlikely things — such as his mother’s doubts
Business
The business world has its share of mavericks and contrarians. Then there is Doug Putman. People scoffed when the 36-year-old Hamilton-area entrepreneur bought bankrupt music retailers Sunrise Records, U.K.’s HMV and For Your Entertainment in the U.S., but he has turned them into profitable, growing chains. Now he’s acquired most of the outlets of insolvent DavidsTea and is reinventing them, turning them into … tea shops. Named T. Kettle, the first locations opened in early November. When he’s not busy turning around failing international chains, he works as president of his family’s business, Everest Toys.

You’ve opened a retail chain in the middle of a pandemic. What were you thinking?

I believe timing is everything. You get presented opportunities but nothing is ever perfect. If we weren’t in the situation we’re in, another retailer wouldn’t be pulling out of 150 stores. People say, “Oh, they couldn’t make it, but you can?” But just because one restaurant fails doesn’t mean you shouldn’t open a restaurant. The opportunity is there because someone has left the market and landlords and suppliers are eager to partner.

T. Kettle specializes in vegan, kosher and organic teas. Tea is already a narrow product category. Are you not worried about being too niche?

No. We’re a premium, loose-leaf tea retailer with ethically sourced product but you’re paying a similar price (to DavidsTea). It’s like getting leather seats in a car at no extra cost. Tea is somewhat niche, but 20, 30 years ago Starbucks was very niche. Often, niche can become mainstream a lot quicker than we think.

Are you a big tea drinker?

I love green tea. I drink coffee too, I’m not a purist. There are people who can smell the leaves and tell you where the tea was grown. We’ve got “tea-ologists” on staff who are very knowledgeable about our 150 different blends. I just appreciate it for what it is.

This is not the first time you’ve taken over a failing business. What’s your turnaround recipe?

It’s not magic. If your expenses are out of line, if will hurt profitability. Publicly traded companies have a lot of extra bodies and expenses so just being privately owned gives us a massive benefit. Plus, we don’t have debt.

Seriously, how can Sunrise and HMV be profitable given that most people buy their music online, if they buy it at all?

We’ve been profitable every year since we bought both ventures. Each business had slightly different problems but we wouldn’t be doing T. Kettle if we weren’t making money. You can’t keep spending money when you don’t get a return. There isn’t a secret sauce. Retail is very tough, but if customer are passionate about your products, you’re already ahead. And people who love records and pop culture are super passionate.

Is nostalgia enough to build a business on?

No, but here’s the great thing: When you go to someone’s house and they put on a record, there is something contagious about it. At the end of the night, half the people say, I’m going to get a record player. Is it convenient? Of course not. But it’s like a wood-burning fire — it’s inconvenient to get it going, but once you do, you really enjoy it.

Do you consider yourself a contrarian?

I don’t, but people use that word about me a lot. Everyone tries to talk me out of things. The way I convinced my team that we should buy Sunrise is to say it was a small enough risk that if we were wrong, it wouldn’t hurt too much. When that was successful and we took on HMV, it was harder for people to say I shouldn’t do it. That can be a bad thing, so I try to surround myself with people like my mother, who will always point out the negative. Otherwise you start believing your own BS. When articles get published about our ventures, I can count on my family to send me the meanest comments. That’s the kind of environment I come from: only the strong survive.

What do you think about the government response to the pandemic so far?

I don’t think politicians understand business. I have yet to find one that has business common sense. You can’t solve this by shutting everything down. You can throw a wage subsidy at the problem and say, “We did our part.” The rent subsidy made absolutely no sense from a business perspective. The landlord would have to absorb a 25 per cent loss and landlords don’t make 25 per cent margins. And you can’t have the same rules for retail, where demand is low, as for warehouses, where there is huge demand.

If you were the mayor of Toronto, what would you implement tomorrow?

I would help people in care homes. We have done a horrible job of protecting seniors. Every politician blames another government but, at some point, someone needs to suck it up and fix it. We also need to help businesses that are getting absolutely destroyed, like restaurants. And a lot of rules don’t make sense to me. I’m not an epidemiologist, but I struggle to believe that going to a grocery store where everyone is touching fruit and vegetables or sitting on an enclosed patio is better than being inside a restaurant with high ceilings and great ventilation.

Your companies operate in three countries. How does business support compare?

The U.S. has been the worst. However, their economy has been the best, with few shutdowns, and their employment laws are more lax in terms of severance or redundancies. The U.K. has provided more financial support than Canada but business has been hit the hardest. Their prime minister was saying, “We’re not going to close down,” and two days later, a complete shift. That kind of communication is horrendous for businesses. Canada falls in the middle.

You’ve talked about a backlash against Amazon. Do you still see that given the recent e-commerce growth?

Yes. When you talk about online buying, everyone automatically thinks Amazon, but there is a pushback because Amazon doesn’t support communities. There’s nothing wrong with shopping online. We all do it. But it’s about whether you support Indigo, a Canadian company — or Sunrise Records — versus Amazon. One thing the lockdowns have shown is how sad of a world it would be to only have Walmart and Amazon, so I think we will see a lot more shop-local focus.
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