Hobby Lobby’s religious convictions aren’t for sale
Friday, January 10, 2014 6:29pm
ZEPHYRHILLS — The first clue that Hobby Lobby isn’t your typical retail business is a sign at the front door saying the craft store is closed on Sundays “to allow employees time for family and worship.”
Once inside, other clues dot the shelves, from the large selection of religious crosses to the decorations quoting biblical verses. Listen closely and you can hear Christian songs playing in the background.
The faith-based subtleties are backed by conviction. David Green and his family founded Hobby Lobby more than four decades ago with the guiding mission to run the business in a way that brings glory to God. Over the years, Green has donated an estimated $500 million to Christian charities, including Oral Roberts University, of which his son Mart Green is board chairman.
Those beliefs are a footnote to most shoppers, who spend more than $3 billion a year on picture frames, craft supplies and home decor items. Even fewer know the Oklahoma-based chain is at the center of a U.S. Supreme Court dispute over a federal health care law mandate requiring employers to cover abortion-inducing drugs.
Last week, Hobby Lobby opened its second store in the Tampa Bay area, at 7333 Gall Blvd. in Zephyrhills in Pasco County. City Manager Jim Drumm described it as a big deal for the rural city of 15,000, where residents are used to driving a long way to get to top retail brands. A craft store had ranked high on a recent Chamber of Commerce survey asking what goods and services residents wanted in their community. Several singled out Hobby Lobby by name.
“We have a fair number of retirees, and a lot of times when you are retired, you have a lot of time on your hands and want to take up new hobbies,” Drumm said. “People were really happy when Hobby Lobby was announced.”
The store took over a Sweetbay supermarket that closed last year as part of a chainwide contraction that affected 33 underperforming locations. Hobby Lobby co-manager Kevin Ross said shoppers lined up outside before the soft opening on Jan. 31, and more than one customer has remarked that the store is busier than it ever was as Sweetbay. A surprising top seller so far? Yarn.
David Green founded Hobby Lobby out of his Oklahoma City garage in 1970. The son of a preacher, he and his wife, Barbara, started out making decorative frames, then added craft supplies, home decor and holiday decorations. They opened their first store in 1972 and have since expanded to more than 550 locations nationwide. The first Tampa Bay store opened in late 2010 in New Port Richey, another community a long way from the urban core.
Hobby Lobby chooses places where it can rent big-box buildings at an affordable rate. It doesn’t target the corner of Main and Main, like Trader Joe’s, which is opening stores along Fourth Street in St. Petersburg and off Dale Mabry Highway in South Tampa. It also doesn’t need to be across from International Plaza, like the Container Store.
Hobby Lobby usually leases space previously occupied by another retailer. Former supermarkets, hardware stores and Kmarts in mid- to higher-income suburban areas are prime sites, said Justin Greider, vice president of Florida retail brokerage at Jones Lang LaSalle commercial real estate. The space costs 50 to 70 percent of what a new building would cost.
“They are very, very sensitive to the amount of money they can pay in rent,” he said. “They are focused on families with some disposable income who like scrapbooking and decorating, but are price sensitive. They aren’t competing with upper-income stores like Pottery Barn and Crate and Barrel.”
On average, stores draw from a 10- to 15-mile radius, significantly farther than a 3-mile reach for a grocery store or 5 to 7 miles for a Target. That makes it possible, for instance, to add a store in Carrollwood or Brandon but still attract shoppers from Tampa’s urban core, Greider said.
Hobby Lobby stores can be as large as 90,000 square feet but, more recently, have taken over smaller retail space in order to facilitate growth. By comparison, Michaels and Jo-Ann stores are about 20,000 to 25,000 square feet.
Hobby Lobby has been referred to as a combo Michaels, Kirkland’s and Jo-Ann Fabric and Craft store on steroids. Stores carry 70,000 products, many of which are made at the company’s manufacturing plant in Oklahoma. By comparison, Michaels, which has twice the number of stores, carries 37,000 items.
Hobby Lobby has been successful in more remote communities like Zephyrhills and New Port Richey, which have limited retail options, real estate officials said. In the case of the newest store, the nearest Michaels is 15 miles away in Wesley Chapel. The nearest Jo-Ann store is 24 miles away in New Tampa.
“If you locate in a more rural area, you tend to have the entire market to yourself,” said David Conn, executive vice president of retail services for CBRE commercial real estate in Tampa. “You’re not splitting the market with other competitors, and it’s unlikely a competitor will go there.”
Closing on Sundays, while welcomed by many employees and believers, comes at a price, he said. Competitors are open daily and have longer hours. Hobby Lobby operates 9 a.m. to 8 p.m. six days a week — a total of 66 hours, while Michaels is typically open 81 hours a week. To stay competitive, Hobby Lobby needs less expensive rent in areas with likely shoppers.
“It all comes down to the bottom line,” Conn said. “They are running a business. They aren’t selling Bibles.”
Hobby Lobby has earned a reputation as a strong, solid retailer, particularly among government and real estate officials who have dealings with the company. The chain carries no long-term debt and starts its full-time hourly workers at 90 percent above the federal minimum wage — about $14 an hour — compared to other retailers that start at minimum wage. David Green, who owns the entire business with his wife and three children, was ranked 246th on Forbes’ list of world billionaires in 2013, with a net worth of $4.5 billion.
The family’s religious beliefs run companywide. The chain employs chaplains to meet the spiritual and emotional needs of its employees, who come from all faiths, a company spokesman said. Gruesome or bloody Halloween decorations are strictly prohibited.
Though not as widely known as Truett Cathy and his family from Chick-fil-A (another business closed on Sundays), the Greens are big names in Christian circles. Last week, Hobby Lobby president Steve Green, one of the sons, appeared on the Trinity Broadcasting Network to talk about his family’s collection of 40,000 biblical documents and artifacts, which is said to be the largest private compilation of its kind in the world. Items from the Green Collection have been on display in St. Peter’s Square and Vatican City and are part of a traveling exhibit called “Passages,” currently in Colorado Springs. Eventually, the Greens plan to open a museum for their collection in Washington, D.C.
It hasn’t been without controversy. A few months ago, Hobby Lobby officials apologized after complaints that the stores didn’t carry Jewish merchandise. As a result, the company said it would sell some items at stores near large Jewish populations in New York and New Jersey before Hanukkah.
In September 2012, Hobby Lobby filed a lawsuit against the federal government opposing a requirement that it provide the “morning-after pill” and “week-after pill” for free under its insurance plan. Compliance, the family said, would violate its religious beliefs.
Hobby Lobby won on an appeal but in October joined the government in asking the Supreme Court to take up the case. The court agreed in November and is expected to issue a ruling by June.
More than 90 lawsuits have been filed by nonprofit and for-profit groups nationwide against the Health and Human Services mandate involving contraceptives. Hobby Lobby is the only non-Catholic-owned business to sue and, so far, its case is just one of two headed to the Supreme Court.
Officials at the Becket Fund for Religious Liberty, the Washington, D.C., law firm that is representing Hobby Lobby for free, said a court victory would prevent the Greens from having to choose between violating their faith and violating the law.
“They hold their religious convictions closely. They are very sincere in that,” said Becket Fund spokeswoman Emily Hardman. “They just want to operate their business the way they have been.”