Headquarters: St. Louis Park
Family name: Estes
What the company does: Owns and operates airport retail venues at MSP and TPA.
Type of ownership: S corp.
Principal owner: Frederic Estes
Family members in the business: 1
Family members on the board: 1
“Our parents told us to save for a rainy day. This was a typhoon.”
Fredric Estes, owner, Estes Enterprises, on airport retail during the pandemic
Walk through the Minneapolis-St. Paul International Airport and it’s all about utility. What do you need for the flight or trip you’re about to take? Most of the businesses are run by global conglomerates, even those with local names you recognize. Few are more faceless than news/gift stores, the ultimate utility purchase. Read the magazine, swig the drink, toss it when you land.
But at MSP, among all that anonymity is a handful of stores that may seem like all the others but represent the sweat and toil of a Twin Cities family that risked everything on an idea—that selling stuff to travelers was a business with potential.
Estes Enterprises operates six retail shops at MSP Airport. The business was birthed in 1973 by husband and wife Fred and Earline Estes as a collection of Hallmark greeting card stores in Minneapolis and local malls. Locations peaked at seven stores, the last of which closed in 2004. The Estes family says the greeting card business began to be commodified in the 1980s, and competing with big box shops became difficult. Sales of gift items like Department 56 collectibles, which drove the Hallmark stores’ margins, had declined as well.
By the mid-1980s, Fred Estes saw the trajectory and was looking for a pivot. He was intrigued with the crowds and captive audiences at airports and thought his Hallmark background made him well suited to operate there. And he had pivoted before; he had first started a funeral business in North Minneapolis in 1962 with his brother (Estes Funeral Chapel, which remains in his extended family today).
“Fred approached [the Metropolitan Airports Commission] in ’85 or ’86,” recalls longtime MSP Airport CEO Jeff Hamiel. “It was unusual to be approached by an entrepreneur. We’d become accustomed by then to giving contracts to large commercial entities. But Fred did his due diligence. It was a high-risk venture for him.”
It was high-risk because doing business in airports makes doing business in malls look like a cakewalk. The cost of doing business is 20 to 30 percent greater than in the non-airport world because of added security vetting for employees, specialized goods handling, and a percentage of sales guaranteed to the MAC.
But Estes knew what he was doing. Hamiel describes the airport environment as potentially lucrative thanks to the obvious captive audience. “You have 35 million people passing through our airport, and you are typically in a spending mode. It’s not a purchase you’re inclined to postpone.” Plus, businesses there don’t need marketing or promotional spending to thrive.
At the time, Hamiel and staff were wary of leasing space to Estes, who lacked the deep pockets of most corporate vendors. “But Fred was persistent,” Hamiel says. “He had a track record, and he worked to establish a relationship with our professional staff.” So the MAC decided to take the risk on the entrepreneur and his vision. Estes’ first store, Estes Gifts & News, on what is now the E concourse, opened in 1987.
The couple’s daughter, Lisa Estes, now 58, moved from the Hallmark stores to MSP to manage the new business. Her brother, Frederic Estes, 54, eventually joined up and took over the business in 2004. “We started young,” he says. “
We worked every job.”
Lisa Estes left the airport in 1997, after her mother’s death, which motivated the change as a “way to honor her.” Fred Estes died in 2018. The family history in the funeral business sparked an interest in mortuary science, which she studied at the University of Minnesota. She’s now an investigator with the Hennepin County Medical Examiner’s office.
The family parlayed its eventual success on the E concourse into three more news/gift stores and two technology outlets called Bluwire. Estes Enterprises also operates a joint venture at the Tampa International Airport, which currently operates 10 stores. “They struggled for the first years, but it grew and Frederic took over—he’s got an entrepreneurial mindset. He’s innovative, interested in new approaches,” says Hamiel.
In case you’re curious, magazine and newspaper sales are in a long-term structural decline, particularly newspapers. Books still sell; electronics are red-hot, as are beverages.
Frederic Estes says the primary challenges are keeping the airport happy and riding out external factors that can depress air travel, from terminal construction to recessions to cataclysmic events like 9/11 or a global pandemic. Multiple stores, he says, inoculate operators like him against small-scale business disruptions and create economies of scale, but nothing helped when March 2020 rolled around.
“It was like a tidal wave,” he notes. “Our parents told us to save for a rainy day. This was a typhoon.” On March 22, 2020, Estes Enterprises closed all its MSP stores, furloughed its employees, and liquidated large inventories. Its first store reopened June 1, and to date its electronics stores remain shuttered. The company is facing product and labor shortages. PPP funds were helpful but left the company with debt.
Estes says 2020 revenues were 38 percent of the previous year. This year, he expects to do 80 percent of normal revenue. He says Delta Air Lines hubs such as MSP are doing better than many airports and describes MSP as on the “cutting edge of retail environments,” despite the airport’s age and space limitations.
Looking forward, the Esteses are confident about the post-Covid future, whenever that comes. Neither siblings’ daughters are interested in the business, but there are cousins currently in the corporate sector who feel differently. Frederic Estes says he’d like to grow the business at MSP and add stores in other airports.
Estes Enterprises was one of the original minority-owned businesses at MSP, and the family is eager to pay it forward. Frederic Estes says lack of access to capital remains the No. 1 impediment for Black entrepreneurs, but he sees small steps forward. “Our parents were always involved in the community and our employees,” he says, “and we will remain that way.”