'This is a museum first'

Visitors shop for souvenirs at the store inside the Smithsonian National Air and Space Museum.

TEXT OF STORY

Doug Krizner: The Smithsonian Institution has been in a mess. There've been questions about its business practices and the conduct of some former executives. This is a huge organization: 19 museums, nine research centers and a zoo. It's funded from a variety of sources: some money comes from the government, some from private contributions and some from the profits of its magazine and gift shops. Now there's evidence the Smithsonian's gift shops aren't making the money they could. And as, Jeremy Hobson reports, there's a move to change that.


Jeremy Hobson: I'm standing on the steps of the Smithsonian's Natural History Museum and I would say about half the people coming out of the museum at this point have a blue bag with the Smithsonian sun logo on it, which means they've been to the gift shop.

Museum visitor: A stone bowl and a piece of copper. I have to have my souvenirs.

No problems there, but then there's this guy:

Another museum visitor: No, we weren't really in the buying thing.

The problem, according to a Smithsonian-commissioned report done by the consulting firm BerglassGrayson, is that there are too many people like that, who don't buy anything.

The report says the museum stores are poorly located, that the top-selling items are not prominently displayed and are sometimes out of stock and that the current profit margin of about 15 percent could double if the stores were managed properly.

Paul Flickinger: They've got their opinion, we have an opinion, and we've decided to execute accordingly.

That's Paul Flickinger, the chief operating officer for museum retail at the Smithsonian. He says the report wrongly compared the Smithsonian's gift shops to commercial retailers, who have more choice in what they sell.

Flickinger: We want to make sure that what we sell is authentic, what we sell matches the needs of the wide disparity of visitors that come of all demographics.

But since the museums are funded largely by tax dollars, Congress cares how the shops perform.
Here's Republican Senator Charles Grassley of Iowa:

Sen. Charles Grassley: Money's fungible so a dollar wasted in the business venture is a dollar of money that's going to have to be made up by the taxpayers.

Grassley says Congress could exert more control over the Smithsonian if it's not managed satisfactorily, but perhaps, says Paul Flickinger, the dilemma comes down to this:

Flickinger: This is a museum first, and it's a retail organization second.

Finding the appropriate balance between the two will come front and center over the next few months as the Smithsonian accepts bids from outside companies who want to run its stores.

In Washington, I'm Jeremy Hobson for Marketplace.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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