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June,
2006

Jeffrey Stone, Ltd.

It’s been a wild, 28-year ride in Houston, “Boom or Bust” Texas for high-end retailer Jeffrey Stone, but careful attention to merchandise diversity has paid untold dividends - and ensured his very survival.

By Jeff Bolton

I chuckled at the irony of the timing on my recent visit to Jeffrey Stone, Ltd. All of the usual media suspects I could find on the radio on the way in to Houston were foaming at the mouth about the Kenneth Lay/Jeffrey Skilling/Enron verdicts, which were being announced in an hour. If Enron doesn’t sum up the “boom or bust” madness of Houston, nothing does. The fact that Jeffrey Stone, Ltd. has not only survived, but also prospered in this environment for the last 28 years is a testament to its founder.

Houston, We Have a Market
“We are in a golden age of cigar smoking,” says founder and owner Jeffrey Stone. “This is probably the best time in history to be a cigar smoker.” Recounting the history of his career as a retail tobacconist, Stone recalls the impact of the landmark 1964 Surgeon General’s report on cigarette smoking that drove a new wave of pipe and cigar smoking that has brought the industry to where it is today.

“We really began in 1978 as much more of a pipe store than a cigar store: back then the humidor was almost an afterthought and the cigar choices were limited, but we managed to grow and develop a good reputation in Houston.”

As interest in pipe smoking waned in the early 1980s and the cigar business was rising from a relative slumber in the 1970s. Stone expanded his humidor. While the enlargement was one of the first in Houston and met with success, it also occurred during that miserable ‘80s period where the anti-smoking “pleasure police” spawned from whatever hell it is they spawn from. “That was just too much,” Stone says, “so I decided to expand our store offerings for men and diversify our business in the event the anti-smoking zealots seriously impacted the tobacco business. I mean, even today, you never know what they are going to do or what level of success they will have in limiting the choices of businesses like ours that are operating legally.”

Following the stock market slump of 2000, Jeffrey Stone was forced to evolve. Identifying changing trends, he elected to add high-end leather, travel, shooting bags, and menswear goods to his merchandise mix.
With an enlarged cigar operation and a hedge-betting, mildly diversified merchandise selection, business appeared to be moving steadily ahead, with untold success just around the corner, right?

“Wrong!” Stone interjects, shaking his head and laughing. “That’s the blessing and the curse of the Houston economy.”

Houston, We Have a Problem
Houston lost 250,000 jobs in the middle ‘80s; Stone himself lost 50 percent of the value of his home. Describing his retail business, he says: “There was no one left to buy anything.” Stone survived the doldrums of this period and got serious about diversifying his offerings. The turning point came when he found the first non-tobacco men’s personal item that held his interest: fountain pens. “At RTDA in the late ‘80s, famous pen makers like Montblanc, Waterman, and Parker were displaying their products and they were very impressive. I became convinced that pens would be a growth industry and we began carrying Waterman pens… The neat thing was that we sold our inventory in the first month and we became the only pen store in Houston.”

With the economy growing again in the early nineties, he brought in additional men’s personal items like watches and dresser-top accessories and expanded the pen offerings to include Parker and Montblanc. Stone hosted the first-ever pen fair in Houston with manufacturers’ reps present - a common occurrence in the pen (and cigar) business today but a cutting-edge idea back then. The pen fairs were enormously popular and Stone became a prototype store for Montblanc, housing their most avant-garde displays and marketing tools, and later became an authorized Montblanc repair center. Also during this time, the Davidoff line expanded to serve higher-end customers and Stone became one of the earliest Davidoff white label dealers after ten years as a Davidoff merchant. “Davidoff has been the best business collaboration I’ve ever had,” Stone says.

Merchandise from gun and rifle maker Purdey, which only has 30 merchants worldwide.
Boomtown Redux
By adding interesting men’s items at the right time, while continuing to grow the cigar business, Stone continued to draw a new crowd of people into the store. Then the cigar boom hit. “What a great time!” Stone says. By 1996, Stone expanded the business to a second location. “Our horses all began to run at the same time and we had a great sales run into early 2000. Then, yet again, the stock market crashed and we slowed again.” The good news this time for Stone and the other retailers in the Houston area is that the city had diversified since the crash of the mid-‘80s and this storm was easier to bear. “But here again,” Stone says, “trends were changing and evolving and that led us to our next evolution in the business: adding high-end leather, travel, shooting bags, and menswear goods. We’re a retail business and not a club, so we need to evolve.” Stone also introduced more sophisticated marketing and publicity efforts that culminated in the sponsorship of a major sporting clays shooting event and the creation of the “The Jeffrey Stone Cigar Barometer of Economic Prosperity” that was featured in the Houston Post newspaper. The column reflected on the types and sizes of cigars men were smoking based on economic conditions and was a tremendous promotional tool for the business.

The events of September 11, 2001 negated Stone’s foray into high-end travel bags when travel came to a standstill in the months after the terrorist strikes, but the other new additions from Barbour, Beretta, and Purdey were well received. “Purdey in particular was a great addition for us as there are only about thirty Purdey merchants worldwide,” Stone says, “but here again, cigars always carry the weight of the store because they are a repeat buy - a renewable resource unlike pen or leather bag sales, where a guy might buy those items and use them for a lifetime.”

Pens have become a key cornerstone of the shop’s non-tobacco merchandise.
The Golden Age of Cigar Smoking
Houston is booming once again and it is in this environment, Stone says thankfully, that we are enjoying the greatest cigars ever produced. “Cigars are an extremely romantic and interesting thing and my career has almost spanned the time from the Cuban revolution… I only missed the front end by ten years!” Stone laughs. “But the current era of cigar smoking is the best in history.” Noting the work by growers in the last 20 years to plant, produce, age, and blend tobacco, he sees the need now for the retail tobacco industry to truly educate consumers, much like Zino Davidoff did in his era. “Ten years ago the cigar offerings were much lighter in blend with fewer brands, but in recent years the choices are dramatically wider. Those choices demand education for the consumer because many of the strong cigars introduced over the last several years would not be enjoyed by novice cigar smokers.” Stone sees a forthcoming trend where the explosively strong cigars will give way to medium- and medium- to full-bodied cigars. “Cigars should first be about flavor and not strength. As an industry we need to do a better job of educating our customers, because the ‘strong, medium and light’ strength designations should not rule the day when it comes to cigar selection. We need customers to realize what they are smoking - and much like the wine producers do with their customers, we need to add growing and aging detail to their experience. We are blessed with really talented cigar leaf growers and blenders today and the real interesting part of the business is in the growing, aging, and blending of tobacco leaf - getting people excited about that part of the industry is where I think we’re headed next.”

After 28 successful years in the business Stone also sees changing technology as a driver in the retail tobacco industry. “The advent of internet technology has made customers much smarter and that has also made the retail business both much more difficult and much more rewarding. Email of course is a great new targeted tool. But on the other hand, for example, we don’t sell leather lap top bags anymore because the new business generation is utilizing Blackberries, iPods, and cell phones to capture the data they need on the road. So we need to keep up with technology to be interesting and competitive.” Until the next boom or bust? “Exactly!” Stone laughs, as only a man who has survived booms and busts can.


SMOKESHOP - June, 2006