Leah Daniels’s Hill’s Kitchen store reminds me of that scene in the film “Miracle on 34th Street” where Macy’s Santa Claus sends parents to other stores in search of toys that Macy’s doesn’t carry, briefly incurring the wrath of superiors before they realize it is a great marketing strategy.
“I don’t want people to buy things and look at it on their shelf and say, ‘Leah’s Hill’s Kitchen made me buy that,’ ” the 37-year-old retailer said. “I want them to look at it in their kitchen and say, ‘I am glad I bought that.’ I try to counsel people on what to buy and what they actually need.”
I saw it firsthand when I spent a few hours in the Capitol Hill kitchen and cooking store last weekend, where the buoyant retailer (and fellow Washington Nationals nut) was holding court with regulars seeking help on cupcake liners and 20-quart canning pots.
The whole thing is kind of a throwback with a happy small-town vibe.
Daniels knew just about everyone who came in. The store (doesn’t everyone love kitchen stores?), on the first floor of a townhouse, is a community meetup den as much as it is a utensil and cooking implement store. That’s part of Daniels’s business plan: create a neighborhood pantry where you zip over to pick up that last-minute garlic press for the spaghetti aglio e olio or a kitschy flour-sack towel commemorating Ohio (she sells all 50 states) for a friend’s birthday. Her average ticket sale is $30.
“I fancy myself as the neighborhood kitchen doctor, diagnosing problems,” Daniels said. “The store is built on continuing relationships.”
She clearly likes the give-and-take with customers. She enjoys discussing her passions, which are Capitol Hill, cooking, her alma mater Carleton College and the Nationals. I am not sure in which order.
The front counter is home to a Nationals bobblehead collection that patrons and friends — all the patrons are friends, it seems — have given her.
“Customers bring them in,” Daniels said. “This is about helping people solve kitchen problems, inviting people into the Capitol Hill community, and about consoling Nationals fans after a bad playoff loss.”
Regulars include people visiting from California, Minnesota and Florida who stop by when in town — almost always to buy something.
The business grosses under $1 million, netting somewhere in the neighborhood of $100,000 after expenses. The biggest expense is the goods she sells, which is 55 percent of her gross. The rent eats up nearly one-third of her gross operating profit. She says the rent is a market rate (her parents own the townhouse where Hill’s Kitchen is located).
Labor is minimal. Daniels is at the store nearly every day of the six days a week it is open. She has two part-timers, a number that can grow to six during the holiday season. About a quarter of her revenue is earned between Thanksgiving and Christmas, when the average ticket doubles to about $60.
That she is even open on Thanksgiving Day is a doubleheader payoff. Customers rush in for last-minute items as she starts or cements new relationships based on dependability.
The store’s most popular item is refills for SodaStream CO2 canisters, which are used to carbonate beverages. Those make up 8 percent of her sales. That reliable stream of customers coming through the door means they might buy other stuff.
Daniels’s competitive advantage is convenience. The big kitchen stores like Sur La Table or Williams-Sonoma have higher sales per capita, but the well-heeled Capitol Hill crowd can drop by Hill’s Kitchen without jumping in a car or making a lot of fuss.
Her biggest competition is what is known as “showrooming.”
“My closest competitor is in people’s hands,” as she likes to say. “It’s their smartphones. People pull out the phone when [they’re] in the store and go on Amazon and ask me to meet the price. In my world, it is called ‘showrooming’ when you use the store as a showroom.”
Daniels intensely dislikes Amazon.com (whose founder and chief executive, Jeffrey P. Bezos, owns The Washington Post), blaming the online retailer as the reason her annual sales have dropped below $1 million.
Daniels is a lifelong resident of Capitol Hill. Her father is a federal judge and her mother is retired from the National Gallery of Art, where she was the chief archivist.
After graduating from Carleton College in Minnesota in 2002 with a history degree, Daniels headed back to Washington and worked at Riverby Books, another Capitol Hill staple. Daniels cut her teeth on retail, refining her skills as a multitasker and learning that she had a knack for dealing with the public.
Wisely, she lived at home for the next six years, saving 75 percent of every dollar she took home. She bought no car. She took no vacations. Daniels has a head for investing. Not stock picking, but knowing enough to defer gratification and buy assets.
When she was 14, her grandfather gave her $1,000. She bought some shares of Fresh Fields natural food grocery, which was eventually purchased by Whole Foods. She cashed out at a fat profit this summer when, ironically, Whole Foods was bought by her nemesis, Amazon.
“I definitely was trained from a young age to save for whatever opportunities I wanted to have in the future,” she said. “My grandparents and parents were big fans of putting money away.
“It’s about, ‘How do you want to live your life?’ ”
She knew the answer to that question after her years at the bookstore: owning a Capitol Hill retail business. She scoped out the neighborhood and decided a kitchen store made sense.
Daniels opened Hill’s Kitchen in 2008, in the midst of the financial crisis. She financed the store with a six-figure bank loan that is now paid off so that she did not have to sell her stock shares. Smart woman.
Daniels turned a very modest profit the first full year open, and the business grew from there.
Her best revenue years were from 2011 to 2014, when sales tipped above $1 million before she was “Amazoned.” She tried offering cooking classes in an upstairs kitchen that would make any Potomac resident proud, but the classes took too much time and effort for the return. She eventually quit offering them.
Daniels certainly isn’t rich. She takes regular dividends instead of a salary, saves like mad in a retirement account, and makes enough to have a big chunk of Nationals season tickets. She owns her home three blocks away.
Most people would kill for the trifecta of walking to work (and Nationals Park), being your own boss and loving what they do. Even her parents come by to help at the store.
“It’s a very satisfying life,” she said.
All it took was some risk.