Invalid Excuses for Poor Business Results
Note to Kmart: It wasn't about the weather
In the 1970s Kmart was the retailer to beat. No matter what happened, they seemed to turn profit. Customers were loyal and prices were hard to beat. The chain was opening more store each year than some of their competitors had in their entire chain and sales were growing at admirable rates. Things were good.
Then sales began to slump. By the middle of the 1980s Kmart was beginning to be report poor sales. The main reason they gave: the weather.
With each disappointing sales report, Kmart blamed the weather. "The bitter cold hurt business." "The blizzard moving through the Midwest kept customers away from the stores." "The unseasonably warm fall decreased demand." Whine, whine, and more whine.
At first, investors bought the excuses. They overlooked the fact that in each sales period Wal-Mart would report record or near-record results. Observers noted that Kmart's merchandise mix was more weather driven than Wal-Mart's because Kmart had more lawn and garden and apparel business than Wal-Mart's merchandise assortment which relied on more consistently selling consumables and commodities.
As time went on, the whine became tiring. Analysts began to grow weary, with one eventually noting that Wal-Mart was apparently having different weather than Kmart.
Top management had become so engrossed by the weather as the reason for poor sales that they did not even look at other possibilities. Prices were less competitive. Weekly ads were not bringing people into the stores. Customers were finding empty store shelves. New products were taking longer to get to Kmart's shelves than at Target and Wal-Mart.
To make matters worse, executives at Kmart decided to upgrade the merchandise mix, thinking their customers would appreciate higher quality merchandise and be willing to pay more. Customers didn't agree. Weekly reports showed customer counts were continually dropping, so management decided to drop the report. The chain was out of control, disconnected to their founding principles, and so convinced that if they could just get Mother Nature's favor everything would be okay.
Kmart is not alone in blaming the weather. Resort areas have long used them as an excuse for a poor season. Home and Garden businesses regularly point to the weather when results fall short. Sporting goods stores and athletic venues say weather controls results. Although one might say there is validity in their claims, it is nothing more than whining, whining, and more whining.
During the fall of 2004, Florida was hit with no less than 4 hurricanes. Orlando's Walt Disney World and Sea World certainly could have complained that sales and profits were hurt because of the hurricanes. Neither did. Why? Both businesses understand the nature of weather on their business. They have designed their businesses in such a way as to protect their bottom-line. They have done so by connecting to their customers and understand exactly what their customers wanted yesterday so they can accurately predict what customers will want tomorrow.
It is not about the weather, it is about understanding what your customer wants and delivering it to them in the manner they desire. Wal-Mart understands, Sea World understands, and Walt Disney Theme Parks understand. More importantly, their employees understand. They are so focused on the customer that the customer will reward them time after time, no matter what the environmental conditions. To be successful, your first second, and third business focus must be on what the customer wants.
Rick Weaver is President of Max Impact, a national leadership and organization development company based in Rochester Hills, Michigan. Rick is an accomplished business executive with experience in retail, market analysis, supply chain and project management, team building, and process improvement. He has worked with hundreds of companies to improve sales, processes, and bottom-line results. MaxImpact offers leadership and organizational development services along with employee assessments and background checks. Contact Rick at 248-802-6138 or via email, rick@getmaximpact.com. MaxImpact is on the web at http://www.getmaximpact.com
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