Colorado Springs News, Sports & Business

Gazette Premium Content Q&A: BargainMart owner says prices, employees the difference

By Rich Laden Published: May 5, 2013

Shoppers like bargains. And that's what Jim Krug gives them.

Krug, 58, owns BargainMart, the Colorado Springs retailer that sells salvage merchandise - discontinued products, seasonal items and the like - that he buys from national chains and sells at deep discounts.

In March, Krug opened a 31,000-square-foot second BargainMart at the Rustic Hills Shopping Center, southeast of Academy and Palmer Park boulevards on Colorado Springs' east side. He continues to operate his other store at Academy and Hancock Expressway, in the Mission Trace Shopping Center on the city's southeast side.

Krug started BargainMart in 2005 in Manitou Springs and moved the following year to Colorado Springs' west side. In 2010, he opened his Mission Trace store; his west-side location in the Springs closed in 2011.

A Wisconsin native, Krug has lived in Colorado since 1986. He formerly worked as a residential real estate broker and a moving and storage truck driver.

Krug recently answered questions about BargainMart via email:

Question: The Pikes Peak region is full of large discount department stores like Wal-Mart, Target and Kmart. Why do people shop at BargainMart if they can go to Wal-Mart or other stores?

Answer: Prices and my employees. Our customers will usually save 40 percent to 60 percent on the same items that they can purchase from any of those retailers. On our drugstore items, the savings can be even greater. I also need to give a lot of credit to my employees. I don't accept applications or r?um?. I hire all my employees on referrals on my first impression, and every day I receive positive comments from my customers about my employees. I have learned that if I have employees that enjoy their job and their life, owning and operating the business is much more enjoyable.

Q: Some people might confuse you with Big Lots or even a thrift store. How does BargainMart operate?

A: Big Lots started out buying large quantities of overstock items, but they have evolved to being more of a discount store like Wal-Mart. Thrift stores sell used items and dollar stores sell smaller quantity packaging or lower quality, limited-use items. I buy semiloads of items people need and use every day from about five national retailers for 13 percent to 32 percent of their wholesale cost, allowing me to price those items at 40 percent to 60 percent off their prices. We are what is called a secondary market - allowing national retailers to recoup or limit their losses on items that are discontinued, seasonal, returned, damaged, have packaging changes or are near or past their 'best-by ' dates.

Q: Who shops at BargainMart?

A: Our best customers are middle class, who are budget conscious but also have some excess disposable income. About 5 percent of our customers use the Supplemental Nutrition Assistance Program (food stamps). We have people who struggle financially every day, as well as several millionaires and many higher-income customers who know that wealth is created by saving money on the everyday items that families need.

Q: What are your most popular items?

A: Our largest supplier carries many of the household items that people need every day, so all of those items are popular. We get a limited amount of gourmet foods (organic, gluten free, foreign) and most of those items sell as fast as we put them out because we charge our regular food prices. Clothing is also very popular. Our customers really appreciate our prices on snacks. Our candy bars are four for $1, and we always have a large selection of chips and snacks.

Q: What kind of business did you see after the recession hit in 2007 and over the next few years?

A: Many people would think that we would do better in tough times, but we had the same result that Wal-Mart did. New customers helped, but because all of our regular customers made financial cutbacks, the net result was limited increases. I increased our sales primarily by adding to our product lines. I was originally dependent on one supplier and primarily sold food items. I now have five major and several smaller suppliers. In tough financial times, businesses that adapt will come out stronger when the economy recovers.

Q: Now the local economy is showing signs of life. Do you worry that an improving economy means a fall-off in business for BargainMart?

A: Saving money is always important, and there are still a large number of families struggling financially in Colorado Springs. The past recession also resulted in changes in how people shop. Even in our store, customers will use their smartphones to compare prices. I have increased my advertising budget, and over the next few months and years, I will be adding more products and services for our customers.

Q: Your new store is in a shopping center that's been abandoned by several anchors in recent years. Do you worry about shoppers being turned off by your location?

A: We opened March 8 and found that many of our south-side customers actually lived closer to this location. I saw a significant decrease initially in customer counts at our south-side store. Opening an additional store was a challenge, but it also increases opportunities. With the additional market area, I have substantially increased my advertising budget. That marketing just began, and we are seeing significant increases in both sales and customer counts. My customer counts and sales on the south side are almost back to previous levels, and the central store is doing even better. The shopping center itself looks very good, and there are a number of things happening over the next several months that will increase customer awareness significantly.

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Questions and answers have been edited for clarity and brevity.

Contact Rich Laden: 636-0228

Twitter @richladen

Facebook Rich Laden

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