The morning at Lemmings Are Best Retail Appliance Tent (LABRAT) was bright and clear. As a
long time leading retailer of appliances (having started in a tent) LABRAT prided itself with understanding customers and selling something to everyone who came in their showrooms. Though they were #1 and had dominated the marketplace for many years they had competitors -- competitors who were gaining on them.
Songbird Of Deals Appliances (SODA), was a long time competitor. They’d been steadily winning sales from people who preferred a store where they could buy many other types of merchandise. Recently a new competitor, Getting Internet Sales Today (GIST) had appeared. Their tactic was to sell name brands very cheaply on the Vines Advertising Service Technology (VAST).
This was the first year that sales in the holiday season were noticeably reduced by competition. So, like all major enterprises, the first reaction was to call a meeting.
HONCHO, the old-fat grizzled head LABRAT looked down the conference table and pontificated.
“LABRAT will stay #1 this year. How are we going to deal with those pesky singing birds at SODA and the upstarts at GIST?”
MarkedRat, the skinny nervous (Head of Marketing/Engagement, HOME), spoke up first.
“SODA and GIST don’t know the consumer like we do. LABRAT tells the consumers what the hot colors will be, how much room we need in the kitchen, and what the magazines will be showing everyone as trendy.”
DeepBlack (The Chief Fur Officer, CFO) contributed data points.
“SODA and GIST don’t have the financing arrangements we’ve made with the manufacturers credit services. LABRAT makes most of its money on the financing, and so we can go with the lowest prices and delivery from each of our many store locations.
OnTheFloor, Head of Selling at the stores, was less enthused.
“People are coming in to compare prices or to see the products they’re considering on Vines. More floor traffic doesn’t convert to sales like it used to.
Honcho had heard similar things – especially when he and his wife had gone to their newest store. He had been dismayed to see her spend as much time staring at her fashion-Vines handheld as she did looking at kitchen appliances on display. He decided to challenge the group.
“I’ve seen that new shopping trend. I want sharper competition to keep our #1 position. That will mean more products on the show floor. We’ll spend money on the Vines to keep our outreach going and build store traffic. I want to be the most successful appliance retailer ever!”
Having gotten their marching orders the C-suite lemmings went off to do their work. After six months the review meeting brought more information to the Honcho.
The Chief Fur Officer went first,
“Our suppliers are working with us. Our orders for more goods have resulted in more credit-sales that are boosting their bottom line. We ordered, and they’re shipping us, more showroom stock and deferring payments for up to 180 days. Even with bottom of the barrel pricing OnTheFloor is getting more sales per sq ft. We’re going to deliver customer’s goods even faster from full warehouses with lots of new colors and styles.”
OnTheFloor was happy, but cautious,
“We have driven a lot of paw-traffic into the locations. We get our share while there are a lot of buys at SODA and GIST. Their sales are rising just as fast if not faster than ours. The new Woodgrain colored appliances are proving to be popular. We’re OK for now, and I’d like to getting a bigger share.”
MarkedRat had news that closed the discussion.
“SereneGoddess, editor over at Beautiful Burrow and Gardens, is retiring. She says she doesn’t understand why young furs want plain black and stainless instead of beautiful colors and designs. She complained that Instagram and Pinterest on Vines were stealing her thunder by previewing what the celebrities were buying for their burrows this season.”
The big Honcho was pleased overall, and promised a big all-hands party after holiday sales results were in.
Honcho saw only grim expressions at the next meeting 6 months later.
DeepBlack, the CFO, again went first.
“We’ve gone off the cliff. The forest fire in September shut down all remodel buying. Our bottom-of-the-barrel prices were because of our volume. I have to pay interest charges on the money we’ve borrowed to pay for all the woodgrain and colors’ product sitting in the warehouses. Paw-traffic is down by 3 paws out of 4. The spring magazine sales will feature the newer “all black” look and we’ll have to have more space to sell new colored products.”
MarkedRat updated the group.
“HotTattoos is the new editor at Beautiful Burrows and Gardens. She is bringing in a whole new staff of writers, art directors, and something new called “Vine Content Editors”. She says they will be winding down the print copy with a move to all-Vines in the next year. What’s to stop young lemmings from moving from browsing BB&G on VINES to purchasing on GIST after seeing the latest fashions?”
OnTheFloor was grim.
“The soft-furred young sales lemmings are quitting to go over and sell at SODA. Many people come into our locations with a Vines Ad showing prices at GIST. Matching those prices cuts margins razor thin. GIST has minimal warehousing and interest costs as they don’t keep much merchandise around and only pull from their supplier when the sale is made. They can live with lower prices than we can right now with volumes down.”
Honcho slammed the table with paws and tried to rally the team.
“We’re the #1 revenue seller. We can keep our revenue by doing the core competencies we’re best at. The affects of the forest fire will only be temporary. We need to execute our plan well and we’ll get thru this.”
Six months later an entirely new team assembled around the executive conference table.
An athletic young lemming, WorkOutChief, kicked the meeting off.
I’d like to introduce NewMoney, our new Chief Fur Officer, who will be putting our financial house in order.
“NewMoney, you haven’t had time to spend with NeutronFawn from location sales, and I’m sure we’ll all get more time together.”
NewMoney started the brief.
“My predecessor, DeepBlack didn’t anticipate just how much the forest fire cut profits. The costs of warehouses full of products, matching prices with sellers who have smaller overhead, and marketing costs to get more paws-on-the-floor caused us to go over the cliff. Our financial failure is still causing problems with suppliers and customers.”
NeutronFawn confirmed.
“LABRAT executed its traditional plan for hard times well. Even the loss of many young furs to SODA only slowed down sales. What OnTheFloor, my predecessor didn’t realize that our young furs floor sale tactics lowered margins and trained customers to expect GIST or cheaper prices. The drive to liquidate the disastrous woodgrain line only compounded the perception that our prices were down permanently. Our former management didn’t anticipate the shift from financing plans to credit cards. We lost the cash flow from our financing plan and suffered from thin margins. I don’t see any improvement soon.”
WorkOutChief reflected and set the tone.
“We’ll have to change the whole business. Instead of executing the same old LABRAT plans we’ll have to live on the Vines, embrace the basic black styles, and make margin on everything we sell in places that make money. Let’s get started – there’s lots of rooms left by our predecessors who went over the cliff together. We’ll work building a new path not pointed at any cliffs.”
The Moral of our Fable is — Relying on tried and true directions to get you out of the woods can lead the whole enterprise over the cliff
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