Hot Air: Nooked

Tom Nook vs. Wal-Mart. As if you could question which retail giant would prevail.

By Aaron Roberts. Posted 02/09/2011 11:00 Comment on this     ShareThis

Hot Air: Nooked

The story of Nookway is well-known to most small town residents, but the tale of its great and crushing success is somewhat baffling to those residing in the the major cities of America, especially as the chain began overtaking the retail giant that would become its greatest corporate rival:  Wal-Mart.

To say that Nookway had humble beginnings would be an understatement.  The store was originally housed in the stump of a former giant Redwood tree in northern California, where its proprietor, an enterprising young raccoon named Tom Nook, tried to bring the residents of his town a place to shop for everything.  Of course, since Nook’s shop, called “Nook’s Cranny” at the time, was far smaller than the average general store, Nook got around this limitation by changing his inventory and selection literally EVERY day.

While unorthodox, Nook’s methods tended to bring in the business, and before long his store had expanded in Nook ‘N Go, a slightly expanded version of the original store, with which Nook began leaving the store open for eighteen hours a day, greatly enhancing sales.  This would later evolve into all Nook brand stores being open for the traditional twenty-four hours a day, though since Nook himself was the sole proprietor of the store at this point, it was simply not possible for the store to be open all the time.

Within five years, Nook had spread his now-renamed Nookway franchise into sixty-five communities throughout the Southwest.  Five years after that, and Nookway stores reached to the Mississippi River, encroaching on the territory of Wal-Mart, Target, and other large chain retail stores.

What was the secret of Nook’s success?  Aside from offering possibly the hugest variety of goods at bargain-basement prices– Nook would suffer criticism of price-fixing and strong-arming manufacturers for years– there was one other aspect of the business that would bring billions of dollars of capital in.  In addition to his retail empire, Nook also offered home- and auto loan-financing to millions of customers.  His unique “pay as you’re able” plan meant that capital would only flow in as his mortgagees basically felt like paying their payments, but somehow it worked.

In fact, it worked so well that Nook was spared the worst of the home-mortgage crash of the last half of the first decade of the 21st Century.  Perhaps it was due to his selection of which customers he would lend his money to.  After all, as it turned out, most of the customers of Nook’s Home Lending, LLC, were also regular customers at Nookway stores, meaning that one way or the other, he was getting their money.  Plus, Nook and his associates found ways of getting customers to borrow even larger amounts of money once their loans were paid off.  While the interest rates were not astronomical, and in fact were generally in keeping with Federal Reserve guidelines, Nook diversified into a chain of buy-here, pay-here car dealerships that ensured he would profit for years to come off of the non-standard market.

With a multi-line chain of retail stores, banks, and car lots, Nook had clearly brought the meaning of the word “business” to a new level.  But this was only the beginning.  Nook then began his own record label, snaring away top talent from other labels with his incredible deals, and began financing Hollywood pictures.  With his Japanese connections, Nook was also able to get a foothold in the video game market as well, eventually scoring a contract to sell the updated Nintendo 3DSi Lite XL exclusively in Nookway stores, which somehow tripled sales of the original Nintendo DS systems.

Looking ahead, Tom Nook stands to be the primary model by which all future business owners judge themselves.  After twelve years, he had surpassed Warren Buffett as the richest man in America, and with his Asian and European franchises, he soon became the most important financial figure worldwide.  His son Timmy Nook’s Melbourne branch soon came to own the entire continent of Australia, and four third-world nations soon heralded Tom Nook as their sovereign ruler– although Nook himself was unaware of two of these plutocracies.  Truly, Tom Nook is the preeminent businessman of our time.

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