Value Added: The Souvenir Business
Here's Tom Heath's latest column on greater Washington's entrepreneur set:
Capitol Souvenir Co. in College Park, Md. , really isn't a souvenir company. It's a tourism business. Capsco-Inc.'s sales rise and fall on the ability of people to travel. What Washingtonian is going to walk across the mall and buy a coffee mug with Ronald Reagan's, well, mug on it? Not many.
What local will shell out for a keychain with the Washington Monument twirling on the end? Maybe someone from Odessa, Texas, or even Odessa, Russia. But not your jaded, inside-the-Beltway lifer.
So when tourism disappears, like it did after 9/11 and in New Orleans after Hurricane Katrina, Capsco-Inc. needs to move quickly.
"Whenever the government has a code red, when they close museums, put missiles on the Pentagon and everyone is scared to travel, when something like that happens, we have to move fast to keep up with changing demand," said Michael Goozh, 33,
president of Capsco, Inc. and the fourth generation of his family to run the 87-year-old Washington company. "When the Statue of Liberty and the monuments were closed for eight months, we switched from tourism to patriotism. We switched to American Flag merchandise, mugs with 'We Will Remember.' "
Right now, with high gas prices slowing driving, families are traveling less and buying fewer souvenirs. Business is down in some places, though it is just fine in the Washington and New York corridor, according to Martin Goozh, president of operations.
Don't feel too sorry for the Goozh's. They are nimble and do just fine.
There are big margins in those plastic key chains and little magnets. Capsco grosses around $3 million annually selling custom designed souvenirs around the U.S., from New Orleans to the Kennedy Space Center, from the Statue of Liberty to the South of the Border amusement park on Interstate 95, and from the Empire State Building to the Newseum on Pennsylvania Avenue.
I estimate Capsco profits are somewhere around 30 percent, although the Goozh's would not say. That puts profits at somewhere around $1 million. Most of it is rolled back into Capsco, though Michael Goozh, his uncle Martin, and his dad Jay, take salaries. They won't say how much.
The business is highly competitive. Come out with a new deck of President Bush Cards somebody else is ripping off the idea within weeks.
So Capsco is always fishing for new accounts to sell their wares. Michael Goozh and his sales manager troll the Internet and attend trade shows looking for new tourist attractions. "We go online and find out who has a new location. Like Crime and Punishment or the Newseum. We brought the Newseum newspaper reprints of important dates in history."
Goozh has one rule of thumb: "Whatever our wives say they love, we don't buy. Any item we fall in love with sits on our shelf. The items we think are terrible, those usually sell."
Capsco is a middle man. It buys millions of souvenirs -- generally in lots of 1,440 -- from manufacturers in China and the U.S. and re-sells them to retailers around the country at a healthy markup. Capsco keeps its edge over competitors by having built relationships with its suppliers over several decades. It also knows the ins and outs of shipping, customers, inspections and all the other things that can go wrong with shipping a deck of cards 10,000 miles.
There are three main divisions: one that sells to retailers throughout Washington, from the Smithsonian to National Airport. A second divison sells to other wholesalers up and down the East Coast. Third, and most lucrative, is a division that sells to major tourist attractions throughout the U.S., from amusement parks to zoos, and at places like the Kennedy Space Center and on Bourbon Street in New Orleans.
In D.C., the busy season starts with the blooming of April's cherry blossoms and lasts until the end of October. It gets really slow in December and January. But not this January. A new administration spells big bucks. And an Barack Obama victory would be a big boost for the traditionally slow winter tourist season.
"We love inaugurations. It's like our Olympics. There is a huge spike in volume. Obama is getting sold out eight-to-one to McCain. And Hilary was outselling everybody."
I love the stories of these old, family run companies that find a business niche and mine it for decades. Think Nat Sherman, the famous tobacconist in New York, which has been around since the 1930s. Family members still walk the floors, drawing on a cigar and making sales.
Capsco was founded in 1922 by Jacob Goozh after he immigrated to the United States from eastern Europe. Goozh ran Empire Photo Studio at 917 Pennsylvania Avenue. When he wanted to make an extra buck, ran up to Baltimore Harbor and started taking photos of World War I doughboys coming off the boat. He would frame them and sell them to the soldiers. Goozh changed the original name to The Capitol Souvenir Co., in 1931.
The company has grown over the years and moved in 2000 to College Park, where it leases some space and has a showroom. They were on 14th Street NW for many years prior to that. As usual with these family companies, there is no debt. The owners take some of the action but don't milk the company. Capsco employs 14. It has two trucks and some vans. Michael's wife helps with the office work. They love the business and are growing it so it will be healthy for the next generation.
"We call this the business that let's us invest into other avenues," said Michael. Real estate, stocks, mutual funds. The Goozhs are diversified.
Michael said they have had offers to sell, but the family is holding on.
"We want to make it to 100 years," Michael said.
Please email us to report offensive comments.
Posted by: Anonymous | August 27, 2008 9:06 AM
Posted by: Anonymous | August 27, 2008 2:42 PM
Posted by: SB | August 28, 2008 1:42 PM
Posted by: capitalist | August 28, 2008 1:45 PM
Posted by: David | August 28, 2008 1:49 PM
Posted by: MC | August 28, 2008 2:20 PM
Posted by: Luka Brasi | August 28, 2008 5:22 PM
Posted by: mezz | August 28, 2008 6:00 PM
Posted by: Anonymous | August 28, 2008 6:49 PM
Posted by: Anonymous | August 28, 2008 8:40 PM
Posted by: beezus4 | August 28, 2008 9:29 PM
Posted by: Anonymous | August 28, 2008 10:03 PM
Posted by: robert | August 28, 2008 10:53 PM
Posted by: Matt S. | August 29, 2008 9:57 AM
Posted by: Cooper | August 31, 2008 9:19 AM
Posted by: Linda | September 2, 2008 6:15 PM
The comments to this entry are closed.