A strategic plan can help you adjust to whatever lies ahead.
My wife and I were surfing TV recently when we stumbled on that old movie, “You’ve Got Mail.” Do you remember that one? Meg Ryan and Tom Hanks play Kathleen and Joe, a couple of New York singles having a fling on the Internet when having a fling on the Internet really was something new.
Of course, what these two don’t realize in the heat of their digital amorous-but-anonymous email correspondence is that they already know and fiercely dislike each other – and for good reason: Kathleen’s precious little neighborhood children’s bookstore is on the verge of being put out of business by – you guessed it – a big, fat chain operation owned by Joe. Hard to believe, but this movie came out in 1998. Sending and receiving emails was oh-so-new back then, but now it’s oh-so a way of life.
You know what else is a way of life these days? Big retailers gobbling up little retailers or, worse, putting them out of business altogether.
Some people can watch the movie and get all warm and fuzzy that two perfect strangers in New York City could cross paths through technology long before folks swiped left or right on their phones. At the risk of sounding unromantic, I see something else completely. My big takeaway from the movie is that you, as a furniture retailer waging war seven days a week with the likes of Amazon, Wayfair, Ikea, Walmart and other Goliaths, better be innovating. You better be reinventing your business all the time. That’s because, just as we thought this big bookstore running the small family of bookstores out of business was inevitable in “reel” life, it is just as true in real life.
Barnes & Noble and Borders were once such imposing bookstore Goliaths that they served as the model for the evil corporation trying to crush independent bookstores in the movie. That’s when the world changed, and the old leaders couldn’t keep up. Such is capitalism.
These days, it’s Barnes & Noble that’s in trouble. You hear that, in worried tones, when you talk to people in the book business. You feel it when you walk into one of the chain’s stores, a cluttered mix of gifts, games, DVDs (DVDs?) and books. And you really see the problems if you dig into the company’s financial statements.
Revenue from Nook, the company’s e-book device, has fallen more than 85 percent since 2012. Online sales of physical books have also plummeted. At the stores, where business was once holding up, it’s down about 10 percent over the past two years. Several stores have closed, and many have reduced staff.
The company’s leaders claim they have a turnaround plan, based on smaller, more appealing stores focused on books, and I hope the plan works. It’s depressing to imagine that more than 600 Barnes & Noble stores might simply disappear — as already happened with Borders in 2011. But the death of Barnes & Noble is now plausible. Much of this is due to the ever-changing retail landscape led by Amazon.
Fast forward to today. Twenty-one years after “You’ve Got Mail,” it’s mind-boggling for outsiders to comprehend the changes that have washed over the furniture retail world. It’s likely very clear to you and other furniture retailers. You may know very well that your store has issues that more modern, nimbler companies don’t have.
These are known as legacy costs. Your legacy costs might include a dysfunctional old building, one that Mom and Dad still own and collect rent on. It doesn’t facilitate a good flow of communication. The showroom was perfect in 1998 but is now too small and outdated. Legacy costs might be when you must buy family members’ shares (or answer to shareholders), creating a debt burden your competition doesn’t have. Maybe you’re even carrying employees whom Mom and Dad, or even your grandparents, hired years ago. They were strong contributors to the business then, but these days they aren’t adding the value they once did. Am I touching a nerve with some of these examples?
Legacy costs are big drags on the growth of your company, just when constant innovation is required. So, what’s the best tool for reinvention? Hands down, I think you must develop a robust bottom-up strategic plan to meet the present and future needs of your business. Focus on the marketing side of your business, and the production and sales sides, too. The administrative aspects as well. All components must be strong and mutually supportive. If you have a solid sales staff, but the warehouse and delivery staffs aren’t fulfilling orders in a timely and professional manner, you’re in trouble.
Despite what Amazon, Wayfair, Ikea and all the other online companies are trying to do, the art of selling furniture to your neighbors and their neighbors and your community remains a people-first job. You are in a people business despite all technological advances since 1998. Most of us, if not all of us, still depend on hiring terrific people to do the various jobs to create a team-oriented, broadly focused operation.
When it comes to crafting that strategic plan, remember that one plan doesn’t fit all. Sit down with your family, your store manager and key employees and come up with your own.
We’ve all got mail, but we don’t want to be like Meg Ryan, who was taken down by a bigger fish. We don’t want to be like Tom Hanks, either. Maybe not in the movie, but likely in a sequel, he too may have been disrupted out of business. We want to be around in five or 10 or 15 years. The best way to do that is to stay on top of your proactive strategic planning.