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.