The Retail NaviGator - our communication to you about our research on retailing issues and the activities of the David F. Miller Center. This ongoing media change creates a direct connection to the retailing community in a way that keeps information current, direct and GREEN!
In this issue:
- Beall's CEO Teaches Students About Retail Economics
- CEO Shares Excitement of Tires Plus
- Kmart Reformation
- Students Learn Toy Business at Toys"R"Us Tour
Beall's CEO Teaches Students About Retail Economics
By Nicole Damico
It wasn't surprising when Steve Knopik, CEO of Beall's Inc., opened his presentation with enthusiasm about the Florida-Georgia game that was taking place that weekend. This University of Florida graduate talked very passionately about his company, which has been operating for almost 100 years. He emphasized how Beall's is a family business, and they want to retain that family business while investing toward the future.
After informing the students about Beall's, he moved onto the topic of retail and economics by using a case study called "Mindy's Surf Shop." The case study was about a fictional surf shop along the coast of the Gulf of Mexico during the recent oil spill. This ultimately became a metaphor for Beall's.
The first common misunderstanding Mr. Knopik explained was that sales and profits do not move at the same rate. Furthermore, you have two types of expenses: Fixed (store manager pay, utilities, rent and depreciation) and variable (sales associate pay, advertising and supplies). Variable expenses require careful management and are also susceptible to adjustment if sales increase or decrease.
Knopik went on to discuss what course Mindy's Surf Shop took when sales decreased because of the oil spill. This shifted into the situation Beall's faced during the economic disaster in 2007 when real estate slowed down and the credit markets froze.
So what did Beall's do to survive? First, Beall's looked at its inventory management, cash flows and developed a Profit Improvement Committee. Secondly, Beall's revamped its communication skills and focused on how the company needed to be more open and honest. Lastly, it examined discretionary expenses, which unfortunately had to be cut. "That's when anxiety sets in." Knopik commented, "Pay is a big element of the profit-loss equation, and pay had to be cut." However, Beall's turned lemons into lemonade. It came up with an idea to save 2 percent of pay by giving long weekends during the summer to its employees. This was a creative technique that turned into a big win for the company. Additionally, because of the economy, the off-price business of Beall's Outlets was thriving. After a year, Beall's paid back all lost wages and long-term debt, re-established inventory and incorporated a new way of buying finding that there was more money in less inventory.
Mr. Knopik ended by saying, "Retail is always optimistic" and what better way of staying optimistic than living the Florida lifestyle.
CEO Shares Excitement of Tires Plus
By Ryan Scheb
Stu Watterson, the president and CEO of Tires Plus, gave a presentation to retail students in October. Mr. Watterson discussed the exciting direction of Tires Plus as well as the opportunities for students to join the growing company. Mr. Watterson shared about his career path and choices he made that led him to become the CEO of Tires Plus.
Mr. Watterson's presentation focused on Tires Plus' success and growth. He said the success of the company revolves around two words: Customer service. To Tires Plus, customer service is everything. In an industry where lower prices are not a sustainable competitive strategy, Tires Plus has worked very hard to satisfy every single customer that walks into one of its 500-plus stores. But for those customers that still aren't satisfied, Mr. Watterson himself calls them to find out what went wrong and how he can help.
Tires Plus is excited to offer a great internship program to rising seniors and a management training program to graduates. Each program involves a comprehensive overview of the stores. From learning how to change a car's oil to evaluating profit and loss statements, interns/trainees learn it all! Tires Plus is able to offer rapid advancement because the company is growing so quickly. Most importantly, Tires Plus takes great care of its interns. They train for a week at headquarters in Clearwater, Florida followed by 10 weeks in the stores. Tires Plus also flew them to Chicago for a national conference.
Tires Plus is a great company headed in an exciting direction! Mr. Watterson's presentation was encouraging for students about to begin retail careers.
By Jose Paz Castro
Robert Bly, regional vice president of Kmart, talked about new strategies Kmart has incorporated and the way they are affecting business. Kmart has strong brand loyalty with brands such as Kenmore, Craftsman and Joe Boxer. Brand recognition is important because customers associate a brand with a store and as a result are more likely to return and shop.
Kmart is not only focused on brand recognition. The company is also focusing on its employees with great diversity initiatives, community service and associate development programs. Here are some of the company's accomplishments:
- Kmart has been recognized as one of the top 100 places to work for Latinos.
- Kmart is a proud supporter of the March of Dimes, St. Jude, and Heroes at Home and is constantly using different mediums to support these foundations.
- Kmart began a five-star customer pledge to acknowledge associates each time they do something outstanding for the company. Once five stars are accumulated, associates are eligible to win a prize.
Kmart stays competitive by offering great prices and customer service, but also by making shopping easier for the customer. Kmart was the pioneer in developing the layaway program. Many of Kmart's competitors started to eliminate their programs due to the increase usage of credit cards and predictions of low usage. However, customers still enjoy the accommodation that layaway offers.
Because of technology's continued affect on retail, Kmart is enacting a new system called "my gofer." This program gives customers a better way to shop by making the experience easier and less time-consuming. Kmart has fundamentally changed the way a retail store operates as customers will send a list of items that they want to purchase. A Kmart associate will round up the items and have them ready for pick-up or delivered. The system, my gofer, greatly benefits elderly and physically-impaired customers who may not be able to make it to the store. By the end of the year, Kmart should have at least 60 operating my gofer stores nationwide.
Students Learn Toy Business at Toys"R"Us Tour
As a leader in the retail industry, Toys"R"Us continues to excite the customer with its assortment of special toys and baby products. The excitement didn't end there when more than 30 students had the opportunity to learn about Toys "R" Us in an exclusive behind-the-scenes store tour. The Gainesville Toys"R"Us store opened its doors to interested students to hear from management and understand what it takes to operate a multi-million dollar business.
Store manager Josh Turner and assistant store manager Max Istatia gave students a realistic view of what it is like to manage a department and a big box operation. They were able to demonstrate the fundamentals of the entire operation as well as the essentials of operating each department.
Students were guided through the front end of the store to understand what the customer first sees upon arrival and how she is assisted through the store up to the point of sale. A point of focus was the sales floor and how it was designed to help the customer find merchandise. It was exciting to see how the electronics department serves as a destination department to display innovative products for today's kids. Also, the store now provides a section of consumable goods to help the shopper save time during her busy schedule. Finally, students were exposed to the Babies"R"Us brand by seeing offerings of everything a parent could need for a baby in a single-store format. They understand that Toys"R"Us/Babies"R"Us is truly a one-stop shopping experience.
In order to understand the flow of merchandise, students were guided through the back of the house and receiving areas. They saw the bike assembly section and learned about the huge increase in demand for this service during the holiday season. As the tour progressed, students were able to witness the preparation behind the scenes to stock and maintain the store for a customer's shopping pleasure.
This electronic newsletter from The David F. Miller Center for Retailing Education and Research is issued throughout the year to provide updates on what is happening in retailing at the University of Florida. Information regarding student outreach, jobs, internships, research and retailing connections throughout the country will be included. We hope you enjoy seeing what Gators are doing in the retail industry!