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Was George or Ewing Right?

Is it right for buying groups to raid other businesses?

One of the advantages of living in Florida is being able to enjoy baseball's spring training. Over the past twenty years, we have enjoyed watching the Cardinals, Yankees, Mets, Red Sox, Blue Jays, Royals, White Sox, Reds, Phillies, and the Tigers practice in our area before they go north for the summer.

One of our prior store locations had a coffee shop in it. During the early Florida spring, baseball was the usual topic of discussion. In the mid 1970's, the discussion centered on how teams were built.

Most of the discussion participants would agree that the Dodgers and Cardinals were to be complimented for their ability to build their teams through their minor league system. It was great to be able to watch a player start in the rookie league, and with skill and practice, progress through A, AA, AAA leagues, and then have a shot at the "big show" as the major leagues are referred to by players. The Yankees and Royals had at that time embarked on two distinctively different styles for creating their major league teams.

With the advent of "free agency", players were able to shop their services to the team that would pay him the most dollars. This seemed to change the complexion, and the rules, of the game.

In the coffee shop meetings, the Red Sox fans were quick to point out that the owners of the Yankees, led by George Steinbrenner, were working to buy a world series as they spent very heavily in the free agent market.

Yankee fans responded to these accusations by explaining that there were new rules as to how to build a team, and that their team owner knew how to excel at the rules.

The Royals, on the other hand, had another idea; unique in the majors. Several miles east of Sarasota, at the Royal's training site, there came into being a "baseball academy".

The theory, as we remember it, was to take young men that were excellent athletes, hone their skills and hopefully create baseball players. If they had the basic athletic skills, perhaps in another sport, they were now groomed to excel in baseball. Frank White was a graduate of the academy. "Academy Frank" as he was called became the second baseman for the Kansas City Royals. He even became an all-star.

Unfortunately, there were other extenuating circumstances that caused the owner of the team to eventually close the academy. It would have been exciting to see how far the experiment that the owner of the Royals, Ewing Kaufman, tried would have taken the team.

It could appear that there was an interesting comparison between baseball and hardware stores. There does not exist a minor league system, so the methods of the Cardinals and Dodgers would not apply. Perhaps the closest that our industry would have for this, would be the occasional individual that worked in a hardware store for many years, and somehow put together enough dollars so that they could make a down payment on a store, and have some operating capital.

Visiting with fellow hardware retailers at conventions and other industry events, you can hear reports of wholesalers being built "Yankee style". It seems that the higher profile a store has, the more frequent the owner is visited by one or more of the competing wholesalers. The term of high profile may be defined by the reputation of the owner, owning multiple stores, perceived purchases, or profitability.

A lot of trade press in the last year has given coverage to these incidents. There has been a lot of remarks and responses by the wholesalers, and there has been plenty of talk between dealers as to what a wholesaler has spent to gain the purchases of another store.

The discussion has been interesting as dealers discuss who has been invited to a wholesaler's show as compared to those dealers whose expenses have been paid so that the dealer, and sometimes their staff members will attend a market.

Talk often turns as to why the move from one wholesaler to another was made. What made the dealer think that the new wholesaler was superior to the prior one? Someone will mention that just like competing brands of household batteries, that if one was far superior to another, then why do the brands have such large shares of the market? There isn't an answer, just discussion. Again, it looks to some like the old "Yankees method".

But the Royals. Who knows what the results would have been if the academy had continued until today? The concept sounds great. Take someone that shows promise, has talent, a healthy financial statement, and shows the skills to create a success story.

Depending on where you gather your statistics it reads something like this: 80% of the new small businesses have failed within 3 years, 90% within 10 years and 98% within 20 years. Franchises have an 80% success rate.

How do we transfer some of the franchise success rate to our industry? Surely if we could capture that, even for stores that have been open for more than 20 years, we could help our industry tremendously. It would require more than just seminars at a trade show, but could provide a way of ongoing assistance.

Maybe the first response from a wholesaler would be along the lines that the dealer cannot be told what to do. After all, he owns the store. But progressive stores would perhaps welcome the input if it was for the good of his store and not to forward the wholesaler's programs. That doesn't say that wholesalers programs are wrong. They just can't all be right for everyone.

The progressive retailer would probably identify with the program when it is right, not because it comes from the wholesaler he is aligned with. It just seems that instead of only picking the cherries, that someone should work on growing new plants. Maybe Ewing had it right.

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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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Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179