Problem

Cherokee Hardware, a retail Subchapter S corporation in East Texas, found that its consolidation from five stores to two had made it more profitable, but still it lost sales to the big chains. Not sure of its market niche and unable to hire and keep experienced employees, the company faced a new crisis when one of the store managers became sidelined by chronic illness. Without management but with a mixture of full time salaried and part time hourly employees, labor expenses rose, same store sales fell, and inventory shrunk.

Solution

Having grown up in the business, Rusty LaFerney was retained as interim manager. He immediately formed a team from the existing employees, explained the crisis, reviewed and discussed all merchandising and personnel policies, then developed a scope and 6-month schedule for implementing significant process changes. Store layout was changed. Merchandise lines that were neither profitable nor traffic builders were liquidated. Point-of-sale equipment was installed to help reduce stock shrinkage. Advertising budgets were maintained, but more emphasis was placed on giving existing customers the best possible service experience in the store.

Results

Inventory shrinkage and suspected employee theft dropped to near zero. Labor expenses rose to higher than historical levels, but productivity, revenue and profitability rose by larger amounts. The business was able to hire and retain educated and experienced management and workers.

Lessons Learned

Most people want to do the right thing and to do it well, and they will when they see that someone cares, expects, and respects exactly that. Showing up, paying attention and telling the truth work wonders.