Location is one of the key factors in a successful business, and gone are the days when adult retailers could survive with locations in the seedier parts of towns. Mark Franks, president and CEO of Castle Megastore Group Inc., realized early in his career that an adult retailer could have a booming business if it didn’t hide on the outskirts of town, acting as if it were ashamed of the wares it had to sell. He also ignored the adult store standard of dim interior lighting and shady back rooms. With 17 well-lit, well-stocked and well-staffed stores, Castle Megastore has become the leading retailer of adult merchandise in the United States.
Castle Megastore was founded in 1987, but by the early 2000s, the company had $56 million in debt and filed for Chapter 11. Franks was brought in to bring the company out of bankruptcy and then assumed control. “The original owner had some good locations, so we grew from that,” he explains. “This is a product-only company – we don’t have peep shows – and we cater to women and couples.”
He tells a story about traveling to Alaska a few years ago and visiting the five adult bookstores in Anchorage. “They were so nasty that I was uncomfortable, and I’ve been in this business a long time,” he recalls. He opened a Castle location in the town, and since then, all but one of the bookstores have closed. Castle was getting the bookstores’ customers, he says, as well as new customers who never wanted to shop at the bookstores.
“We were getting customers they would never get, and their normal customers were coming to us because we had more to offer,” he says.
The Castle Megastore concept is large stores with a significant amount of inventory – the company’s largest store has 20,000 square feet. “If you can’t find it at Castle, you probably can’t find it anywhere,” Franks notes. The stores are clean, well lit and designed to be welcoming to women. When he came onboard, the stores didn’t have much merchandise, but he knew a lot of the vendors and encouraged them to work with him. Many of them gave him credit and special terms to help dig the company out of the red.
“Everything was broken when I got here,” he stresses. “I wanted to turn it around, so I found the best software, best POS systems and best employees. Now it’s the most-shopped adult retail chain in the country.”
A Professional Approach
Castle Megastore’s employees are a big part of what ensures its ongoing success. In 2005, Franks started “Castle University” to educate employees about customer service and the products. The program has been so successful that education has become a core part of the culture, he notes.
“We carry about 14,000 SKUs and new products and materials are coming out all the time,” he says. “Our managers need to know everything about these products and be able to talk to customers about them. We take a professional approach to retail, and our employees take pride in learning about the products and company. Our employees really love what they do.”
Historically, adult retailers have not been known for stellar customer service, but Castle Megastore is doing all it can to change that perception while constantly working to improve. Last year, the company took a close look at every job position, procedure and process, and analyzed them to ensure best practices were being used. This was a big step, Franks says, toward ensuring a “great working environment and great experience” for customers.
“Everything we do, we do it professionally,” he says. “Not only are the stores well-stocked, but we have a professional merchandiser on staff and a full-time marketing department. Approximately 80 percent of our employees and managers are women – not by design, we’ve just developed that way, and I think it’s helped our business. We hire the best person for every position.”
Castle Megastore’s offerings are extensive, with items for “romance, intimacy, sex, health and wellbeing; lingerie; massage; bath and body; cards; and apparel,” Franks explains. The company buys almost everything directly from manufacturers, and then employs strict testing programs to ensure it sells quality products. It distributes products to 17 locations – in Alaska, Arizona, New Mexico, Oregon and Washington – from its 50,000-square-foot office and distribution center in Tempe, Ariz. The ongoing focus, he says, is on the customer.
“We offer new products in our top-performing stores to find out what people like and don’t like,” he says. “We’re not focused on just having a lot of products in our stores – we have to have the right products. We don’t buy what we like, we buy for our customers. Obviously, these are very personal products, but there is a customer for everything we sell.”
Castle Megastore understands that providing customers with consistent, quality experiences keeps them coming back, and each store has programs to bring in new customers. Several years ago, one of its stores in the Phoenix area hired a pianist to wear a tuxedo and play piano during February to celebrate Valentine’s Day, and many of its stores gave away a red rose with every purchase to honor the romantic holiday. All of the stores offer workshops to educate customers.
“Castle Megastore founded and hosts the Healthy Loving Institute™ to conduct a series of free monthly seminars presented by university-educated professionals in the field of human sexuality,” Franks says. “Each is a renowned and accredited educator, therapist or counselor local to the area. These seminars are meant to help individuals and couples improve their romantic life, deepen their intimate life and enrich their sex life.”
To connect with customers online, Castle Megastore launched a new e-commerce site last year. Castlemegastore.com allows customers to shop online, but the site also has a blog and video channel that provide product reviews, explanations about product usage, sex education and store promotions. The company soon plans to add a gift registry to the site.
“Our site is very user-friendly and makes us more competitive in the marketplace,” Franks says. “Major retailers sell many of the products that I sell – there’s a transformation going on and it’s just beginning. When I was growing up, no one talked about sex or sexual orientation, but now anyone can turn on the TV or go on the Internet and see whatever they want, and the whole concept of how people think about sex is changing. The adult business is much more mainstream and there is money to be made. This transformation is causing a normalization of the modern adult store, and that’s how I want people to think of Castle.
“The market is becoming much more prolific, and that’s bringing in a lot of new consumers,” he adds. “These new customers will eventually come into a Castle store, and we want them to like what they see and come back.”
Going forward, Franks plans to expand Castle Megastore in its existing markets and then move into other areas. As it grows, however, he stresses that the company will maintain its standard of “great stores and great selection,” as well as knowledgeable staff. Castle Megastore wants all of its customers to feel safe to explore themselves through its products and services.
“We are not judgmental about customer preferences – that is one of the keys to being successful in this business,” he stresses. “We have a whole variety of customers, which makes it fun. This is a very interesting part of retail, and I’m proud to be a part of it.”