Adam & Eve entered the retail business in 2000 when it purchased a handful of existing stores and revamped them to fit the company's upscale, couples-friendly image.
"Our mindset was to get the Adam & Eve name out there, to increase the reach of the brand name and push it into the mainstream," Adam & Eve Vice President of Internet Sales Sean Trotter explains. "We want to change people's thinking about adult stores, to go out into communities and be a positive presence. These are actually beautiful stores."
Currently, Adam & Eve operates several company-owned stores in its corporate home base of North Carolina as well as seven franchised stores in Florida, all feature a mix of lingerie, club and party wear, accessories, novelties, games, DVDs and videos aimed at women and couples.
But the company's boldest move on the retail front came late last year, when Adam & Eve opened a store in Auburn, Mass. The Massachusetts store is the company's first retail location in the Northeast, but it won't be the last. Adam & Eve Vice President Bob Christian told XBiz the company plans to have Adam & Eve stores in every state within the next several years.
"People like to feel, smell and touch items, and try them on," Christian says of Adam & Eve's expansion into retail. "You need a store for this. Different people buy for different reasons at different times. Adam & Eve stores are women friendly and couples friendly, versus the catalog, which tends to be more male oriented."
Retail operations still comprise the smallest percentage of the company's overall sales. The mail-order catalog, or "mothership" as Trotter calls it, rakes in around 55 percent, while the Internet division is responsible for around 30 percent. Adam & Eve's DVD division, which produces roughly 100 titles per year, makes up about 10 percent of its business, and the remaining 3-4 percent comes from the retail stores.
The greatest challenge in setting up franchises, according to Trotter, is finding the right location "in a nice area that can be proud of and show everything we have to offer, and isn't restricted by local laws from selling adult merchandise."
Pointing out that retail success is all about "location, location, location," Christian says that Adam & Eve helps franchisees with all real estate issues, including site selection, negotiation and store set up, as well as training employees, purchasing or leasing equipment and deciding on the right mix of inventory.
Trotter says another challenge is resistance from conservative and religious groups that are opposed to adult-oriented businesses moving into their communities. In 2005, for example, Nassau County, Fla., officials attempted to keep the company from opening a franchise in the unincorporated area of O'Neil. After some legal wrangling, the county realized it had no legal grounds to keep the store out, and the store was allowed to stay open.
To help avoid such legal entanglements, the company encourages and helps franchise stores to build positive relationships within their communities, starting with contributing to the local economy by creating jobs for residents, but also taking additional steps to be good neighbors. "Adam & Eve's history is to give a portion of our profits to charitable efforts," he explains. "So, we help them figure out how to do things like sponsoring a local breast cancer golf tournament or [adopting] a section of the highway."
Christian adds that being welcome in a community is sometimes a matter of small, simple steps, such as maintaining a professional operation and an inviting appearance. "Adam & Eve stores are attractive, well lighted, clean. They don't have live entertainment, massages, modeling, or peep shows, and we generally participate actively [in the community] through the local chambers of commerce."
Adam & Eve supports franchisees through in-store promotions, celebrity signings and fashion shows. Christian said the company's marketing know-how and connections within the adult community should make the prospect of opening a franchise attractive to entrepreneurs.
One promotional advantage comes in the form of Adam & Eve's contract stars, Carmen Luvana and Austyn Moore. "Carmen has been with us for three years and is a walking PR machine," Trotter says. "Everywhere she goes, she's Carmen Luvana of Adam & Eve. If you ask the average fan, 'Do you know Carmen Luvana?' they're likely to say yes. We've been able to leverage her popularity to increase sales exponentially."
Adam & Eve also provides franchisees with marketing advice based on its continual research efforts. For example, last year the company ran focus groups to gauge the female market for adult products. It found out that women are, in fact, willing to shop in adult retail stores, but they have to be courted in vastly different ways from male customers.
"[The women] are coming!" Christian adds. "We hold monthly programs in the store that focus on women-oriented topics and are often promoted as being 'for women only.' We have refreshments and open, honest and fun programs."
The company also gets extra bang for its promotional buck from strategic relationships with high-profile adult studios. Last year, Adam & Eve generated major press when it teamed with Digital Playground for the big-budget blockbuster "Pirates," co-starring Luvana and Moore. "It was one of the biggest movies of the year, and it really helped get the Adam & Eve name out there even more," Trotter says.
But Christian says all of these corporate-driven promotions pale in comparison to the goodwill generated simply by treating customers well. "Word of mouth is the best promoter for destination stores like ours," he says. "People just need to know they are there, then be treated right when they visit, so they come back and tell their friends."