Retail Environment 1990 – 2000
January 18, 2012
Tully’s Merchandising and Messaging System [ Retail History-Case Study]
January 18, 2012
Items = Loyalty
Hot Pants – Name Game T-Shirts, Patchwork Denim, and the Pet Rock
In 1971, after completing my MBA at the University of Washington, it was time to find a job. In those days we were still thinking about work as “finding the right company”, as most of the people we knew had worked for only one or possibly two companies in their entire life. So you start with a bank and then a transportation company or maybe a public utility. Since I had played college basketball, I got the idea that maybe I could be a sporting goods buyer and, because my in-laws had a close friend who worked for Allied Stores, I thought why not ask for a conversation – and the rest is history. Si (that was his name) took me straight to the Human Resource Vice President and little did I know that The Bon Marche’ was hiring one MBA per year as a test to bring that level of education into the organization – within 30 days I was in Retail.
My first few months were devoted to giving me a wide set of experience – 2 weeks in Accounting, 2 weeks at the Distribution Center, a week in Security, and some time helping a Department Manager – and that was where the concept of selling items began to appear. Retailers learn how to make money by buying something at one price and selling it at a higher price, and the best way to do that is to sell a lot of one item vs. selling a small amount of a lot of items. The concept in the 1970’s was “narrow and deep” – buy narrow assortments and stock them deep for “item maximization”. Find a best seller and buy more until the consumer tells you they want no more.
The Story of the “Slush Mug”
So what is a slush mug? Well, in 1970, slush mugs were a very hot item. All you had to do was place your slush mug in the freezer and, once frozen, pour your favorite juice in the mug and the juice turned to “slush” – sort of a “slurpy” in today’s world.
So there I was, on my first day of training on a retail selling floor. I had done the distribution, accounting and security, and finally had my coat and tie on to do some merchandising. All ready to go, I was brought up to the 6th floor to meet Larry Kron, the Department Manager for Housewares. After a brief discussion, he gave me my very first retail assignment. On the 6th floor between the escalator and the restaurant were 4 columns that held up the building, and around each of those columns were 4 levels of glass shelves. Well, these slush mugs were located on the 3rd column and Larry told me to move them to the 2nd column which was 12 feet to the south. Sounds easy until you understand there were over 1,200 slush mugs to move and they all were in need of dusting. So, for the next two days, I moved, cleaned and restocked over 1,200 slush mugs. Wearing my coat and tie, with my MBA, I was moving slush mugs 12 feet south.
Needless to say, I was at a loss as to why this 12-foot move made any difference – and, to this day, this was one of the most important lessons a merchant needs to learn. You see, the slush mug sales had slowed down and of course we owned a ton of them. They had been sitting in the same space for several months, and were dirty and looked tired. Moving these mugs, I like to say, is similar to ice fishing. If you are fishing at one hole and the fish are not biting, find a new hole in the ice. And, the slush mugs started selling again thanks to my great merchandising. Moving the mugs 12 feet to the south made all the difference.
The World/Social Trends – The early 70’s were punctuated by protests against the highly-unpopular Vietnam War
– Horrible images of the war that just wouldn’t end
– Tragedy at Kent State protest – kids gunning down kids
– Watergate was the reality of our political life
– The Supreme Court validated the right to abortion in its famous Roe vs. Wade decision
– The heartbreak of Munich in 72 – watching Jim McKay hour-by-hour as the tragedy unfolded
– Also featured “Rocky” movies, whose theme song “is so triumphant – it’s like you know you can make your dream come true”
– John Travolta rose to fame – “Saturday Night Fever” was red hot
– “All in the Family”, “M*A*S*H”, and “The Brady Bunch” made their mark
– There was escapist fare on TV, like “Happy Days”
– When ABC showed “Roots”, everybody watched
– So did disco, The Hustle, bell bottoms, long hair, hippies and peace signs
– Terrible fashions that we all want to forget – polyester!
– The 70’s were called the “Me Generation”
Comments taken from CBS “The Early Show” aired on November 12, 2008.
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The Merchandise – Baby Boomers were just finishing high school and Young Men’s and Young Women’s Departments were “hot”
– The focus in the early days was Items – and those items grew into Classifications
– In the beginning, Department Stores were the main merchants for Records, Books, Toys, Luggage, Stationery, and Drugs
– Later in the 70’s was the start of the Category Stores – Pay & Save (the first Big Boxes)
Key Items – Patchwork denim jeans, PVC jackets, the pet rock, the name game T-shirt, the multi-picture frame, classic denim with lots of pockets, growth of Men’s fashions – Van Heusen, all types of T-shirts, the Frame Department
– The hot, trendy items were in the Junior’s and Young Men’s Departments
Production – Quality was determined by where it was produced – Japan was quality, China was
cheap
– By the end of the period, India, Taiwan, The Philippines all were in play
Focus of Meetings – The major meetings were Best Seller Meetings as the game was to merchandise a selection and chase the best sellers
– Merchandising was about – 1st delivery, unique assortments – very few promotions
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Communication Strategies – Most of the decade we only had very traditional communication – all of which was outbound
– Newspapers were the main source – TV was growing and FM had just begun – car radios were AM only
– Direct Mail was just starting
– The Department Store Credit Card was key – many people’s first credit card
Marketing – The Department Store started with one promotion per month – 1st weekend – that’s when Boeing got paid
– If the sale was bad, we had a rescue event at the end of the month
– TV started with a One Day Only Mattress Event on Mondays – TV was run on Sunday
– Items moved to Assortments and, in the last few years, Brands started to become important
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The Positioning Factors
Quality – – People didn’t fuss much about quality- as Items were King
– Though there was a group that spent more on Quality – Frederick & Nelson vs. The Bon vs.
Value / Price – + – Price was cheap
– Value was not much to worry about as value came to mean quality at a price
– Later in the decade, these two aspects merged
Selection + + – Very important
– Had to have the Right Items
Service – – Not much power
– Efficient checkout
– Young people did not care
Image / Cool + + – Very important to the Baby Boomers
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Customer Service – At the beginning of the period, Customer Service was not very important
– Having the Right Items and lots of them was most important
– People loved wearing the same thing – and later in the decade they would wear the same Brand
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What was Loyalty – At the start of the 70’s, the Baby Boomers were just starting to consume
– The Junior Departments was the statement and Hot Items were the reason to shop – with some Loyalty
– So stores had loyal customers, but the Hot Item would drive this group of customers
– Customers started to get Loyal to the word “Sale”
