The storefront of Liberty Street Video at 119 E. Liberty in Ann Arbor.

When the economy soured last year, Dave Kozlowski still felt optimistic about the prospects for his business, Liberty Street Video. After buying the store in 2007 and investing in new inventory, sales were growing 10-15% each month, and he had finally stopped losing money.

But in January, he says business took a turn for the worse. Since then, sales at the East Liberty store have dropped around 5-8% each month, with no sign of improving. So with his lease up for renewal at the end of the year, Kozlowski has decided to close the last independent video store in Ann Arbor.

Sunday will be the last day of the store’s regular hours. It will be closed on Monday and Tuesday, then reopen on Wednesday with truncated hours: from 2-8 p.m. weekdays, and noon-8 p.m. on weekends. The goal is to sell off all inventory, including DVDs for $5 and $2 for VHS tapes. Kozlowski says he’s hoping to recoup some of his roughly $200,000 investment and pay down $40,000 in debt, including the $10,000 in back rent he owes the landlord, Ali Amiri.

“It’s been fun,” Kozlowski told The Chronicle. “I love it. I love the town.”

Liberty Street Video has been hanging on despite a dramatic shift in the industry. In fact, Kozlowski says the economy might have just expedited what was already inevitable. Netflix, the mail-order movie rental company, has hurt bricks-and-mortar businesses, as has its more recent rival, redbox. Amazon.com is offering an on-demand service that lets you download movies to watch on your computer. And in September, news emerged that YouTube – owned by Google – plans to offer its own video-on-demand service.

Even large chains have suffered – just last month, Blockbuster announced plans to close nearly 1,000 stores nationwide by the end of 2010, as it struggles to compete. Both Blockbuster and Hollywood Video have several stores in the Ann Arbor area, but local independents, like Campus Video and Panorama Video, have closed.

Another competitor is the Ann Arbor District Library, which has an extensive collection of DVDs and Blu-ray discs, free to anyone with a library card. Kozlowski hopes the library might be interested in buying some of his collection, including some of the rarer titles.

Liberty Street Video has been known for its eclectic collection. The store’s international section carries titles from 19 countries, and they have a wide selection of genres, including gay/lesbian, cult, silent movie, documentary and adult. Because of its inventory, students at the University of Michigan are frequent customers to rent movies for the courses they’re taking. Some film instructors give the store their syllabi, and Kozlowski says he makes sure they have several copies of each movie on hand.

But business from the university wasn’t enough to keep the store afloat. Kozlowski said he tried different promotional efforts, like $1 rentals and 2-for-1 deals, but there just wasn’t enough foot traffic for rentals anymore from the general public. He’s been subsidizing the business trying to make it through, and says that his landlord, Ali Amiri – who owns the Persian House of Imports at 325 E. Liberty – has been very patient and supportive.

Kozlowski told his five part-time employees about his decision last week. He’s uncertain about what he’ll do next, but says he plans to stay here – he lives in Howell.

Before buying the store from Laura Abraham, Kozlowski worked in the trucking industry. He was born and raised in this area, but had been living in Tennessee until returning here to take care of his elderly mother, who has since died.

When he bought the business, he saw it as an opportunity, one that could give him some flexibility to take care of his mother, who moved in with Kozlowski and his wife. Though the store was struggling when he bought it, back then he believed he could make it work – and for a while, he did: “I thought we’d make it.”

Liberty Street Video is located at 119 E. Liberty St., near the corner of Liberty and Fourth Avenue. Its phone number is 734-213-1944.

Carolyn Hough, proprietor of The Mail Shoppe, peers out from behind some UPS packages that are ready to be sent out.

When customers call Carolyn Hough asking for directions to her store, she always tells them the same thing:  Look for the big yellow mailbox. Hough, owner of The Mail Shoppe in downtown Ann Arbor, says the decorative mailbox has marked the store’s location since it first opened 26 years ago.

For Hough, owning her own mailroom wasn’t something she dreamed of as a child. Originally hailing from Rhode Island, she spent most of her career as a medical librarian, a vocation she says was “very different” from her job now. What did that entail? It was a research position – before there were computerized databases. So responding to research requests from nurses and doctors – say on the latest known effective treatment for a particular disease – entailed manually poring through indexes and literature.

Hough purchased the business in 1983 from Doug Barnett after the hospital she was working for went bankrupt. “I love it – it’s so much more fun than working at the hospital,” she said. Readers who think that packaging a bear’s head sounds more fun than rummaging through medical literature might agree with her.

The Mail Shoppe serves as a mailroom for local businesses as well as individuals. What exactly are mailroom services? One thing that can mean is folding and inserting – if there’s a giant stack of letters with a corresponding stack of envelopes, the store will fold and accurately assemble the mailing, plus apply the postage. Using the Mail Shoppe can be a cost-effective alternative to sending employees on a mail errand  – the Mail Shoppe will pick up mail  and then send it out, something Hough says “can be a lot cheaper than going to the post office.”

The Mail Shoppe also rents mailboxes to residents who might travel for months at a time and want their mail to be delivered to a safe place. The mail can then be forwarded to a temporary address. The store is an authorized UPS drop-off, and will package and mail invitations for weddings, corporate events, and university functions.

Sometimes a parked vehicle obscures the distinctive yellow mailbox used as a landmark for the Mail Shoppe on Division Street.

The mail industry isn’t a lucrative business. “We make our money one penny at a time,” Hough said. As the U.S. government struggles to come up with ways to keep the postal service profitable during the recession, Hough says the change in the economy has definitely affected certain aspects of her business. “We’re doing more mailing for businesses, and less for walk-in customers,” she said.

She believes more businesses are coming to The Mail Shoppe because they don’t have the money for high-speed mailing machines or just don’t have the employees and resources to take care of daily mail. Hough’s business sees the impact of the economy in other ways, too. “During the holiday season, we noticed that people weren’t sending as many gifts as they typically would,” she said. 

With over one million pieces of mail processed each year, Hough and her employees have encountered some bizarre packaging requests. “We once mailed a bear’s head for a customer to a place where leeches were going to remove the flesh,” she said. Along with the bear’s head, Hough has mailed Shakespearean costumes, Christmas trees, countless pieces of art, and a collection of burnt pieces of wood that were going to be tested for DNA.

And then there are always the things people seem to forget when they’re visiting friends and relatives: car keys, dentures, and garage door openers. “That’s what makes this job fun, though,” said Hough. “You never know what’s going to come in and where it’s going to go to.”

The store has five employees. Some are part-time college students while others have been with the store for years. Hough owns the building that houses the store, which is located at 317 S. Division. “It’s a great location – it’s downtown but it’s also right near the university,” she said.

If you’re looking for that yellow mailbox, Hough does want to give you a warning when you find it. “Sometimes people think it’s a real mailbox, and they try to put their mail in it,” she said. “It’s solely for decoration!”

The Mail Shoppe is open 8:30 a.m to 6 p.m, Monday through Friday, and 10 a.m to 1 p.m. on Saturdays. The store can be reached at 734-665-6676 or at mailshpp@aol.com.

About the writer: Alex Nicola-Iott, an intern with The Ann Arbor Chronicle, is studying journalism and business at Indiana University. He’s spending this summer with his family in Ann Arbor.