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The Letter

A letter to association directors

When this writer was a member of the board of directors of one of the industries trade associations, we were presented at one of the meetings a letter that the association had received.

"Dear Sir,

Enclosed is a copy of your bill for association dues for the coming year. I bought my store 5 1/2 years ago and there has been a store here for 30 years before me.

The last time I saw anyone from your association was 5 years ago when someone came and installed the authorization terminal for credit cards that I had ordered through the organization.

The reason I have not paid my dues yet is #1 money, and #2 the big reason is I have two warehouse stores within 15 miles of my store and now they want to open another one 2 miles down the street. I've been trying to fight and cope with this major problem to stay in business.

I think the association better start doing something about helping out the small stores and stop trying to sell all those services before there are no stores left to pay dues. s/ Robert Morris"

They said that if you hear from one unhappy customer there are probably ten more out there that have not taken the time to write. Whether on not that is true, we felt that it was important to respond.

"Dear Mr. Morris,

Because we have experienced the arrival of warehouse stores, we know of your concerns and problems. When we experienced the arrival of the first warehouse store, our sales dropped 22% within one year. We experienced a second and third warehouse store opening within another year. And for the next four years, we floundered at a decreased sales level. Another store in our city, owned by a friend named Steve, fared much worse as they reported that their sales dropped by 50%.

Both of us made serious errors that were uncorrectable. The errors however, are unavoidable by other stores. The first error was to fail to prepare for the coming of the warehouse stores. It is much harder to respond to the arrival of a warehouse store than it is to prepare for their arrival some 12 months before they open.

Sure, all of us have walked through one or two of them. But have we paid close attention to the products they stock and the prices they charge? Have we closely watched as they had their grand opening sale to see just exactly what they do to attract so many customers?

Secondly, Steve and I both thought that our sales would return after the newness of the warehouse stores had worn off. It didn't, and it won't without a renewed spirit of attack and a plan of action. We can't be the store that we were before they arrived. We have to look at repricing hundreds of items as well as changing brands on many of the items we stock so that we are not going head to head with them on everything we sell.

Finally, we both expected that someone would come to our rescue. We both buy from multiple wholesalers; everything from a very small local supplier to a much larger regional supplier. None had any answers that were any better than, "just wait it out and your customers will come back."

We took different approaches to solving this common problem. Steve decided that they would find a way to survive with the decreased sales. They had not done any advertising, and didn't start any. The did not open evenings or Sundays, and they followed their suppliers' suggested retail on every product in their store. And somehow, with only half of their original sales, they managed to cut expenses and survive through these years.

After the first year of sales decrease, we tried several ideas to increase sales, but we saw little results. Then again, perhaps if we had not tried several things, perhaps our sales decrease would have been more like our friend, Steve.

During these lean years, we were fortunate to develop a close working relationship with a representative from a wholesaler. Oddly enough, this representative also calls on Steve's store. The representative was generous with his time. Our experience has been that this individual was a rare find.

The key is that we went looking for help. We began to read every trade publication that we could find. We also made a point to visit as many other stores as possible, looking for ideas that worked in their store.

Every time that we had a visit from this representative that we mentioned, we asked for ideas that were working in other stores that he had seen. He came to solve problems, not to just sell us just another new product line that his company had added. We took extensive notes with each visit. We did not follow all of his suggestions, but with those that we did implement, we wrote him a letter and told him of our efforts and initial results. We always asked for another visit. Our experience has been that a representative such as this will continue to make return calls as long as he sees that we are making an effort to solve the problem, and that we are listening to what was said.

Sad to say, during this time period of problems, the vendors and other sources that we would expect to help us find solutions were of little help. Today, if another challenge were to occur, we would again call on this representative, as well as calling on our association's staff. We would also make a renewed effort to ask for assistance from the vendors and other sources that we believe should have the most interest in our store, partially because we know that they are now very aware of the warehouse stores current strategies and how to deal with them.

Again, the responsibility to solve the problem belonged to our store. And the benefits of solving the problem will go to the staff of our store. The procedure to solve the problem includes five points. We must first identify that we need help. We then have to want some help, and thirdly have to ask for help. Responding to the help, and implementing the help complete the cycle.

As a sidenote, we have rebounded. We anticipate that this year will produce our highest sales ever. We will never compete with the warehouse stores if we consider competition to only be the store with the lowest perceived prices, most hours open, doing the most advertising, and having the most customers in their store. We can create a profitable place in the market for ourselves by being different. And being different is being different from what we were in the 50's as well as from what we were in the last five years.

Not every customer wants the warehouse experience. Think how dull it would be to take a walk outside if all of the birds you heard were singing the same song. We have to sing a different song, and sing it loudly. Nothing speaks so loud as a customer telling another potential customer.

From our experience, so far, there can be life after a warehouse store comes to town. We hope that you find it for your store. Some don't. But our friend Steve, and our store, have. We just used different paths. If we can be of help, please correspond.


Tom Shay"

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.

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