Small Town Real Estate Arbitrage

Al Doan shares his perspective on creating destination retail experiences by buying and revitalizing small towns. Through his experience with Missouri Star Quilt Company, he demonstrates how physical locations can enhance online brands and create unique customer experiences.

Key Points:

• Small Town Real Estate Strategy:

  • Buildings in small Missouri towns cost around $20,000-80,000
  • Bought entire downtown district (27 buildings) in Hamilton
  • Recently purchased 8 buildings in Kingston for ~$70,000
  • Investment strategy: Put $2M into renovating old/condemned buildings

• Business Model Philosophy:

  • 90% revenue comes from online sales
  • Only 8-10% revenue from physical stores
  • But 98% of marketing revolves around the town experience
  • Creates authentic brand story versus "nameless faceless warehouse"

• Creating Destination Retail:

  • Turned quilting stores into tourist destination
  • Added complementary businesses (restaurants, lodging) to support visitors
  • Goal was to have "most quilt shops of any town in the world"
  • Physical presence differentiates from other online retailers

• Future of Retail Towns:

  • "Every company should have a town"
  • Believes specialized retail towns work for many verticals (cooking, baby products, etc.)
  • Creates immersive brand experiences
  • Allows customers to feel part of a community

• Business Impact:

  • Helps overcome marketing challenges in niche markets
  • Creates energy and buzz that pure online retail lacks
  • Builds stronger emotional connection with customers
  • Transforms traditional e-commerce into experiential retail

• Key Success Factors:

  • Must create comprehensive experience beyond just retail
  • Physical manifestation of brand increases perceived value
  • Location becomes part of company's story and marketing
  • Creates defensible advantage against pure online players