Shortly after World War II, Barbara and Jerry Klein opened a small retail store in the northern New Jersey metropolitan area. Their major product lines included cotton, wool, and other fabrics that Jerry was able to buy from a few of his old war buddies who worked in mills located throughout the southeastern United States. The fabrics were purchased by an almost exclusively female clientele from the local area for use in making curtains, clothing, slipcovers, pillows, and other related home furnishings. The store also sold curtain rods, hardware, zippers, sewing supplies, and related accessories. The store was a great success throughout the 1950s, 1960s, and 1970s. During that time, sales grew from $150,000 to more than $2,500,000 annually. The store employed 30 people, mostly homemakers from the local area who were sewers and clothing makers themselves. The warm, cozy, and friendly atmosphere made the store a favorite of the local and surrounding townspeople. Several competitors came and went over the years—those that survived were very small, posing little threat to Barbara and Jerry, who essentially enjoyed the fruits of a monopoly. Barbara’s (comfortable) world came crashing down during the 1980s, as sales steadily declined to less than $1,800,000 by the decade’s end. Their original clientele had gradually retired, moved away, or passed on by that time. The modern-day women from the area were now going to college and establishing professional careers rather than staying at home sewing curtains or making clothes. At the same time, a number of new and more diversified competitors had come onto the scene, capturing more and more market share. Those new stores carried a much wider range of products, including bridal wear; tablecloths and napkins; miniblinds and assorted shades; quilts; blankets; and limited lines of furniture, lamps, candles, and complementary products. Barbara and Jerry’s daughter Sandy, a recent business school graduate who grew up working part-time in the business, came on board as assistant manager of operations. Sandy was being trained and groomed to eventually take over the business. Given her many years of direct work experience and her newly acquired business management skills, Sandy was given some freedom and encouragement to effect change and turn things around.
A NEW ERA
The store’s entire merchandise inventory was counted, assessed, and reorganized. Sandy got rid of slow-moving and stagnant inventory. High-turnover, high-profit merchandise was given more and better shelf space. A number of new products were added to challenge the competition and better reflect the buying trends and needs of the modern-day consumer. The most significant change was the addition of a new Home Consultant Division. Recognizing the needs and characteristics of today’s professional woman shopper, Sandy proceeded to bring the business to the customer in the comfort of her own home. During evening and weekend hours, sales associates visited the homes of working women. Offered a variety of full-color catalogs and fabric samples, customers could simply select the blinds, shades, draperies, wall coverings, slipcovers, and so on of their choosing and write a check for one-half of the total invoice as a deposit. The sales associate took the necessary measurements while on site. The finished products were delivered and installed in approximately two to four weeks. The remaining balance was paid at the time of delivery and installation. The Home Consultant Division was a huge start-up success. Sales reached $1,000,000 during the first year of operation and $1,500,000 during year 2. As the division grew, so too did a number of problems and inefficiencies. A shortage of qualified installers caused the lag time between orders and installations to grow to as much as 6 to 12 weeks. On the home appointment side, where a customer could once expect to have a sales associate visit within a week or two of inquiring, the wait for an appointment had grown to average about one month. On top of all of this, Sandy knew that there was a lot more business out there to capture. Customers became impatient and unhappy, as Sandy now faced her first serious problem that needed to be fixed fast. The complacency and lack of marketing savvy of her parents had allowed a number of able competitors to come onto the scene, two of which were gearing up to offer their own home shopping divisions. Sandy asked Barbara Johnson, one of the sales associates, to document the complete and exact process that takes place from the time an inquiry is received to the time that an installation is completed, in the hope of identifying specific inefficiencies and production bottlenecks. Johnson’s report can be summarized as follows:
• The process begins with a phone call from people responding to newspaper ads or from in-store shoppers. No programs are currently in place to actively solicit prospective customers.
• The secretary or whoever happens to answer the phone records the information (name, address, phone number, nature of inquiry) and places a note in the sales associate’s mailbox.
• A sales associate (currently two full-time, one part-time) places a phone call to set up an appointment in the order in which the inquiry was received. Most clients are within a 25-mile radius of the store.
• A typical day for a sales associate might include a 4:00 p.m. appointment in one town followed by a 7:30 p.m. appointment in another town. On Saturdays, the sales associate typically has a 9:00 a.m. appointment in one town followed by a 12:00 p.m. appointment in another town.
• The associate then meets with the client, equipped with catalogs and samples, order forms, and measuring equipment. Most appointments result in a sale. The sales associate takes the necessary measurements (window sizes, sofa dimensions, and so on), and leaves with a check for an estimated 50 percent deposit.
• The sales associates spend about one day per week processing orders (calculating the yardage and best source of material, locating the appropriate curtain rod, tabulating the exact invoice total, and so on).
• When all of the materials arrive at the store for a particular order, the sales associate is notified and then proceeds to contact and schedule an installer; this also includes a scheduling call to the client.
• The installer completes the delivery and installation and collects the final payment for the store. Johnson also provided the following breakdown of each sales associate’s average distribution of time spent on the job:
• 40 percent of the time is spent selling at the client’s home.
• 30 percent of the time is spent processing orders.
• 30 percent of the time is spent traveling between appointments.
Barbara’s report concluded with a summary from the installation side of the division: “Most deliveries and installations are made by two independent subcontractors that have been with the company since the start-up of the division. They have a reputation for doing good work. Several others have come and gone—this due to either poor workmanship or lack of availability or reliability. “Several customers have complained about the appearance and presentation of the installers and their equipment. Many of the clients are women who live in suburban neighborhoods. These women are often home alone when the deliveries and installations are made. They are apprehensive and fearful when they see unshaven young men with old clothes pull up to their home in a battered old van. A few customers have actually refused to let the installer into their home without first speaking with someone at the store. “The two primary installers are working hard and are steadily falling further and further behind the order file.” As for the many untapped markets and additional new business that is out there, Sandy wants her staff to become more proactive—to go after orders rather than just waiting for the phone to ring or for a shopper to inquire while in the store. Sandy feels that the company is making a big mistake by completely ignoring the local industrial and governmental markets.For example, on the industrial side, hotels, restaurants, banks, offices, and many other establishments regularly purchase and update their furniture, window coverings, and other interior decor. The same is true for prospective governmental customers such as schools, city and town offices, and federal buildings. Sandy also notes that all of the customers, both in the store and in the home, continue to be almost exclusively women.
1. You have inherited a company that must make several internal changes to survive and thrive. How would you plan for and manage each of the changes that must occur? Be sure to address both strategic and tactical aspects of your plan.
2. The text lists and describes a number of operational aspects and components; select each of those that are relevant to this case, and provide a specific example of a technique that you would incorporate into the new operation.
3. In general, what interpersonal skills and management techniques will you use to successfully effect change?
