Spotlight On: Building loyalty, one customer at a time

For Exposé owner Dino Palmiotto, personal and professional lines blurred in the most magical ways.

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here’s an old Yiddish adage: “Der Mensch Tracht, Un Gott Lacht,” which means “Man plans and God laughs.”

Dino Palmiotto’s lifelong dream was to be an FBI agent, but it wasn’t meant to be. In 1993, Palmiotto, who had never been an adult club customer, enlisted in the Marine Corps. He avoided adult clubs while a Marine, as several fellow Marines were getting into trouble there. That all changed when Palmiotto literally stumbled into a club doorman job, which led to his incredible career as an adult industry entrepreneur.

In 1996, during a 60-day leave after returning from an aircraft carrier deployment, Palmiotto dropped his girlfriend, a waitress at the San Diego Déjà Vu club on Kearny Villa Road, off for work. As he was backing the car out, his girlfriend ran out of the club, explaining that they needed a doorman that night and that he could make $300 in tips. Despite his ambivalence at not knowing the job, Palmiotto jumped at the chance to make way more than he did as a Marine.

That night, while Palmiotto was escorting an 18-year-old customer to his car, ostensibly to get his supposedly “forgotten” wallet to pay a dancer $150 for dances rendered, the customer bolted, leaving Palmiotto fearful of getting fired almost before he started. Moreover, the customer had abandoned two young friends at the club. Palmiotto put the fear of God into the friends, threatening arrest at their homes if they didn’t come up with the $150 by 11 the next morning. Sure enough, their escaped friend returned the next morning with the money, along with his embarrassed father, who insisted he apologize.

Marines are allowed to take jobs during their off-hours. Palmiotto got transferred to a Marine Unit in San Diego soon after that, and the day he arrived, he was hired by the Déjà Vu Kearny Villa Road club manager as a night doorman. In contrast, his day job was with the regimental command in the Marines. As if that wasn’t enough, the ambitious Palmiotto was also in college full-time, working toward his degree.

After his hitch ended in 1999, an acquaintance of Palmiotto’s found an adult nightclub license nobody knew about with a good location. They partnered to open the original Club Exposé on Miramar Road in San Diego. The club did well, and Palmiotto bought his partner out in 2002 and continued to grow the business. In 2010, everything came full circle when Palmiotto bought the Kearny Villa Road Déjà Vu club — where he got his start — and moved his Club Exposé there.

Storerotica legal correspondent Larry Kaplan spoke with Palmiotto about making the adult retail shopping experience easy for customers, staying on top of his business, and the joy of doing what he loves.

SE: Do you feel you have a more comprehensive perspective on the industry than most operators, having gone from doorman to owner?

PALMIOTTO: Most people aren’t able to accomplish that; I was very fortunate. Since I was never a customer, I learned the business from the inside out. I love what I do. The industry is who I am; I’m at my club and store every day and night, 20 hours a day, seven days a week.

I’m also president of the San Diego Hospitality and Entertainment Coalition. In 2010, I led a rebirth of the San Diego club association. California is divided into San Francisco, LA, and San Diego, with three club associations. We all work together on some issues. There are frequent legislative challenges to our survival as an industry, so you do the best you can to keep fighting the good fight.

SE: You first operated a small boutique within your club before expanding that to the current freestanding boutique next door. Why did you decide to open the original boutique?

PALMIOTTO: There was a huge demand from our entertainers, and other boutiques were so expensive. The boutique was very successful, with no overhead. The next step was expanding into its own store. Most of our pricing now is 25-30% cheaper than others. We get lots of repeat business, but a freestanding boutique changed the demographics, bringing outside clients. We also conduct a few monthly classes, tapping into niche markets like BDSM and our spanking class. And our online store is happening.

SE: How else has the boutique evolved since first opening?

PALMIOTTO: We’ve focused our products. Every area has specific products that work and products that don’t, so we’re constantly swapping product out. It’s easy because people make particular requests. They don’t just say vibrator; they usually specify which brand, so we show them that whole section. We can provide additional options, but generally, they know what they want. And I’ve been very fortunate that many vendors have been supportive.

SE: It sounds like you have a more educated consumer base than many businesses?

PALMIOTTO: Once we get customers past opening up — which my staff is good at — and they tell us what they want, we’ve got plenty of testers, and we just go through it. It’s not about upselling; they always return because they’re comfortable. It’s just about providing what they need.

SE: Do you see much crossover between your club and store customers?

PALMIOTTO: Many club customers are starting to open up to boutique products. For example, a club regular recently asked me to recommend an anal lube. He would never have asked before, but he’s loosened up. I sent him to the boutique, and my staffer, Iliana, helped him out. She did a great job of making it easy and non-confrontational for him. He was back in five minutes, raving about the experience.

Stores sometimes get a bad rep for being sleazy. Our following is based on how comfortable and exceptionally clean the boutique is. That’s important because many of our customers are business people who feel okay going in.

SE: The layout of your store is striking. What was your process in designing it?

PALMIOTTO: The store design was mine but was based on my observation of the customers’ experience inside the store. I just designed something simple, clean, and efficient. I watched where customers stood, sat, and even talked. Then, I adjusted the furniture accordingly.

SE: How do you market the boutique at the club and vice versa?

PALMIOTTO: It’s such a part of the club now that it’s well known. The DJ markets it over the sound system. We’ve got some ads up, and the girls help. I also do marketing downtown and on social media. We have a new boutique website launching shortly. And our club website lets you choose between the club, the online store, and the boutique. So that’s driving traffic, combined with numerous social media reviews. Exposé has the highest reviews Google and Yelp in town. And the boutique’s got an excellent reputation. They each get five stars.

SE: Do you do anything at the boutique to market the club?

PALMIOTTO: There’s no need. The name’s the same; they see the girls and customers going back and forth. They’ll start at the boutique, then come check out the club. Plus, numerous couples visit the club first, then go to the boutique, buying something to have fun at home.

SE: Multi-unit operators typically have more buying power. Is that a disadvantage for you with just one store?

PALMIOTTO: Everybody talks about buying power, but I’m old-school; I believe your vendor relationships determine pricing. Just pay your bills, do your thing. Explain what’s going on, and work with your vendors. Then they’ll take things back that aren’t moving. In turn, I’ll try new products they have to help them out. Some are more helpful with testers and displays than others. But overall, I can’t complain.

SE: What are some of your best-selling products and sectors or categories of products?

PALMIOTTO: We sell lots of We-Vibe. And we carry more shoes than anybody in San Diego. Pleaser has made us their San Diego flagship. Girls come from other clubs, buy shoes, and then buy other products. They just go to a whole section, and we’ve got all their products. Unlike other stores, we don’t just pick and choose a few products to see what works without stocking them long enough to give them a fair chance. System Jo has been amazing; we’re their San Diego flagship store — we also have the honor of being their first flagship store. We have everything of theirs; a huge wall unit of every lube imaginable, and the pricing’s right. Customers often say, ‘It’s so much cheaper here; we’ll just take two because it’ll cost the same as one elsewhere.’

SE: That’s great if you make up in volume what you lose in individual markup. The bottom line is customer loyalty and how many dollars you throw in the bank weekly.

PALMIOTTO: One-hundred percent correct. A lot of stores out here don’t have many products. And what they do have is just so expensive. I think owners get complacent. They get comfortable with their stores making sufficient money and don’t stay on top of it. They stop reinvesting and bringing in new product. You’ve got to fight every day to keep things moving.

Since I was never a customer, I learned the business from the inside out. I love what I do. The industry is who I am; I’m at my club and store every day and night, 20 hours a day, seven days a week. — Dino Palmiotto

SE: Besides System Jo and Pleasers, what are your other best-selling brands?

PALMIOTTO: We’re selling more Pastease than ever before. And we have our own clothing branding, so we’re constantly bringing in new apparel for dancers, which is a no-brainer; they just walk next door and buy new outfits; it’s so easy and accessible.

CalExotics has been doing great for us. We have all their new products. We’re moving a lot of Power-Poles; we’re one of their flagship stores. We carry Ardell eyelashes, and Leg Avenue and the Lapdance stockings have been selling big-time, not just to dancers but general customers as well.

We manufacture our own male enhancement pill, Dino’s Aminos, and it’s done fine. And because I am the face of Exposé, people ask which pill I recommend? I tell them, my own. And then they buy it, are happy, and continue to return and repurchase it.

Interestingly, when something’s not moving, we put it in our clearance bin. People will rummage through there for 10-15 minutes. I think every store should have a clearance bin. I once forgot to mark down an item there, but that didn’t stop people from buying it anyway, just because it was in with clearance.

People want good deals, especially in today’s economy. We bought a lot of Halloween outfits from Dream Girls. They didn’t do well during Halloween, but we stacked them in the clearance bin. With all of the goth parties and different events happening in San Diego, people buy these year-round now, which I would never have expected.

SE: Do you have any particular pet peeve with buying product?

PALMIOTTO: For me, it must be an all-inclusive relationship. I need to have a connection with the distributor. Because once you buy the product, it’s not over. You’ve still got to call and talk to your distributor. So I have to be able to ask things like:

‘How do you recommend marketing this?’

‘When can we set up training for our staff?’

‘If there’s a defective product, can we send it back?’

I’ve been fortunate with vendors that have been just over-the-top amazing. Lee Negri and Lou Anginone from National Distribution and Mike Lerner from Xgen Products have been wonderful to work with.

SE: If you could speak with distributors and manufacturers, what would you advise them to do to help themselves and bring more customers through your door?

PALMIOTTO: These manufacturers and vendors need to stay on top of it. Like stores, some get complacent. They don’t update their packaging and aren’t as aggressive in the market as necessary. And they need to check in with their stores. Most of my vendors do that, at least in the very beginning. With some, I quickly realize it isn’t working out; they have to go. I just pack up all of their stuff and kick them out. Not in a bad way, I just tell them, ‘I can’t sell your stuff; it’s the same boring shit. We’ve got other vendors coming through with great packaging and everything else, and you’re not updating anything with your products. I don’t know what to tell you.’

Larry Kaplan has been the Legal Correspondent for ED Publications for 21 years. Mr. Kaplan is a broker in the sale and purchase of adult retail stores and adult nightclubs and the Executive Director of the ACE of Michigan adult nightclub state trade association. Contact Larry Kaplan at 313-815-3311 or email larry@kaplanstoresales.com.