Cutting hours evolves to cutting days

March 9, 2009

DISCUSSION TOPIC

Survival Strategy: Cutting Store Days 3/9/09

TOPIC SUMMARY:

After decades of being open seven days a week, Portland-based retailer Kitchen Kaboodle is closing its doors on Mondays, Tuesdays and Wednesdays in order to survive the downturn. The owners figures that with consumers only buying on sale, the cost savings from closing the doors on those days will enable the company to bring in lower prices on the other four days of the week.

“What our customers want and what everybody wants is lower prices,” John Whisler, a co-owner of the five-unit kitchen appliances chain, told the Portland Business Journal. “We were thinking, if that’s the ‘new normal’ and everybody wants everything on sale, we as a retail business, and locally-owned one, feel we need to get people what they want.”

If the store just slashed prices across all days, it would lose money. Monday, Tuesday and Wednesday have long been the stores’ slowest days. The savings come mostly in labor costs.

Every item is now discounted 10 percent to 50 percent across the store, with lower-margin products getting the smaller discounts. Mr. Whisler said the stores’ prices are now lower than many big chains like Crate & Barrel.

Mr. Whisler admits the idea is a “bold step” but is really a logical reaction to the marketplace.

“I think we all, in any business, get invested in how we’ve done things. You think we’ll just tough it out and trim here and cut here and hold the line on this expense. But after a while in this economy it’s pretty challenging,” he said. “We don’t want to be just limping along. We want to be seen as the place that gives people what they want.”

Discussion questions:  What do think of closing down a store a few days a week to bring in lower prices the rest of the week? Is this just an option for smaller chains or can larger ones benefit from closing doors on slower days?

My post: 

Many retailers and shopping centers are cutting back on operating hours to remove operating costs from non peak hours.  Kitchen Kaboodle is taking this to the next logical step – closing completely on unproductive days.  The people who would normally shop on Monday through Wednesday will be inconvenienced, but their numbers were clearly not material to the business.  It will also be easier to hire and retain a committed workforce who can have a clear work schedule and even have 3 days to consider a second part-time job if they choose.

Having given these positives, the strategy will only work for small chains – most landlords would not tolerate a closed storefront 3 days a week.  The store competes more with higher end stores vs. Walmart so I’m not sure if “price” should be the foundation of their marketing.  This type of product sells due to an inspiring environment and shopping experience.  This will be interesting to watch.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

————————————————-
Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13598

————————————————-

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!

Advertisements

Wal-Mart to the Rescue?

January 30, 2008

————————————————-
RETAILWIRE DISCUSSION TOPIC

Economic Downturn? Wal-Mart to the Rescue– 1/30/08
————————————————-

TOPIC SUMMARY:

While much of the retail industry is hoping that Congress will pass a stimulus package that will get consumers shopping again, Wal-Mart is looking to jumpstart spending with a price rollback of 10 to 30 percent on thousands of items in its stores and on its website.

Discussion questions: How effective will Wal-Mart’s latest rollback public relations effort be in driving traffic to its stores and grabbing market share in the short and longer term? What will be the response from Wal-Mart’s competitors? Can they handle a prolonged price war with Wal-Mart?

My post:

During market downturns, companies with strong cash reserves invest heavily in building market share.  This is what Wal-Mart is doing, and capitalizing on its leadership as a “low price leader.”  The move is smart, timely, and most importantly it is congruent with their vision and mission.  Weaker competitors will suffer more than stronger ones, but Wal-Mart’s move will certainly challenge all purveyors of consumer staples – as they always have.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

————————————————-
GO TO THE FULL STORY AND DISCUSSION:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12723  

————————————————-

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!