Survival Strategy: Cutting Store Days

Discussion
Mar 09, 2009

By Tom Ryan

After decades of being open seven days a
week, Portland-based retailer Kitchen Kaboodle is closing its doors on
Mondays, Tuesdays and Wednesdays in order to survive the downturn. The
owners figures that with consumers only buying on sale, the cost savings
from closing the doors on those days will enable the company to bring in
lower prices on the other four days of the week.

"What our customers want and what everybody
wants is lower prices," John Whisler, a co-owner of the five-unit
kitchen appliances chain, told the Portland Business Journal. "We
were thinking, if that’s the ‘new normal’ and everybody wants everything
on sale, we as a retail business, and locally-owned one, feel we need to
get people what they want."

If the store just slashed prices across all
days, it would lose money. Monday, Tuesday and Wednesday have long been
the stores’ slowest days. The savings come mostly in labor costs.

Every item is now discounted 10 percent to
50 percent across the store, with lower-margin products getting the smaller
discounts. Mr. Whisler said the stores’ prices are now lower than many
big chains like Crate & Barrel.

Mr. Whisler admits the idea is a "bold
step" but is really a logical reaction to the marketplace.

"I think we all, in any business, get
invested in how we’ve done things. You think we’ll just tough it out and
trim here and cut here and hold the line on this expense. But after a while
in this economy it’s pretty challenging," he said. "We don’t
want to be just limping along. We want to be seen as the place that gives
people what they want."

Discussion Questions: What do think of closing
down a store a few days a week to bring in lower prices the rest of the
week? Is this just an option for smaller chains or can larger ones
benefit from closing doors on slower days?

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22 Comments on "Survival Strategy: Cutting Store Days"


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Doron Levy
Guest
Doron Levy
13 years 2 months ago

Closing on certain days can save a retailer money but is it the best way? Remember, when the door is closed, you are not selling anything. And if I want what Kaboodle sells on Monday, am I going to wait until wed to get it? Probably not. I’m going to their competition, which will probably stay open just because the other store is closed. We are open to be in business. Can’t sell anything when the doors are locked and as tempting as the savings are, I don’t think it’s worth it in the long run.

Max Goldberg
Guest
13 years 2 months ago

This is a bold move by Kitchen Kaboodle, but it makes sense, at least in the current economic climate. This kind of tactic can work for local chains, because it is easier to coordinate across all of their stores. National chains might have more difficulty doing this.

Challenging times call for different ways to do business. It will be interesting to see whether or not Kitchen Kaboodle’s net sales and profits increase.

Steve Montgomery
Guest
13 years 2 months ago

Today’s consumer is very used to getting what they want when they want it. I certainly understand the rationale of cutting the days/hours to save on labor but this will require an adjustment in the consumers’ mindset and shopping patterns–something that we have found they are reluctant to do.

The danger for Kaboodle is that the message (open fewer days to provide you better prices) gets lost in translation and that what consumers hear is the chain is not doing well and likely to go out of business. It’s a bold move, but one fraught with danger and not one I would expect to see other chains embracing.

Craig Sundstrom
Guest
13 years 2 months ago

This brings to mind an old Woody Allen joke about a man who was promoted when he showed his boss “that the company could significantly increase its profits by unlocking the front door”: (retail)life hasn’t quite deteriorated to the level of a joke…it’s actually gotten worse.

Mel Kleiman
Guest
13 years 2 months ago

Their are only two cost savings in this model. One is utilities and the other is labor. If they cannot cover the cost of those utilities, they are going to be out of business soon, anyway. Now the question is, how much does labor cost to keep the doors open? If the business is so slow on the first three days of the week that they can not even afford one person who can maintain the store and do stocking or other jobs, then they have another real problem. I would suggest learning to fail, fast.

Mark Burr
Guest
13 years 2 months ago

It’s the next step in the process of closing on Thursday, Friday, Saturday, and Sunday. Judging by the products they sell, their problem isn’t just price or slow days. Their problem is what they sell is sold everywhere–even in places that you might not expect. The issue is their market is diluted. They will never win at price. What they have done now, is limit their opportunity to offer value–everyday.

I’m guessing that there will be five retail locations available for lease soon.

Lee Peterson
Guest
13 years 2 months ago

It makes sense to cut hours, but it’d be much better to reduce them by day and stay open for peak hours than to darken the doors for days at a time. I agree with “scanner” above in that, if they persist in this, they’ll soon be closed the rest of the days as well.

Phil Rubin
Guest
Phil Rubin
13 years 2 months ago
There are two issues here–the “always on sale” which goes without saying, is only a viable strategy for WMT; and the issue of not staying open every day. A local wine merchant just changed their hours at one of their smaller, neighborhood stores and will only be open Tues-Saturday (backwards GA doesn’t allow retail liquor sales on Sunday) from noon-8pm. Their main store is open Mon-Sat 10 AM-9 PM. From a business perspective, if they’ve done the analysis and listened to customers (as they indicated in their email communicating the change) this might be fine. It’s also easy enough to reverse and, to their credit, they are communicating it to their customers. From a customer perspective, I’ll still shop there, as I’ve never been in there on a Monday and they do a great job. Yes, WMT can be open 24/7/365 and obviously most online stores are as well (though not B&H, notably). But just like the fact that we don’t need every store in every retail pad in every zip code, if more businesses… Read more »
Michael Boze
Guest
Michael Boze
13 years 2 months ago

Closing on Monday through Wednesday sounds good; but what is his landlord’s point of view? This is not a mall retail strategy. I would look to cut unproductive hours out of the day and run his business on a single shift–11:00 AM to 7:00 PM.

This seems to be a extreme example.

Tim Henderson
Guest
Tim Henderson
13 years 2 months ago
Kitchen Kaboodle’s strategy sounds good–up to a point. My unanswered question is, once the economy improves, how do you get consumers to pay the original, higher prices? In effect, they’re educating the consumer to only buy when items are on sale. That said, whether the Kitchen Kaboodle strategy is right or wrong is almost secondary. The primary issue is that this is how all struggling merchants should be thinking right now, i.e., implementing reasoned cost-saving measures and rethinking the overall bottom line. Closing shop on certain days won’t work for all merchants, but it may work for some. The larger point is that merchants who want to keep the doors open for the hoped-for post-recession need to make adjustments now that fit their operations. Kitchen Kaboodle also demonstrates how merchants should be rethinking the bottom line, and not just dollars and cents. Similar to our 2/25/09 panel discussion (“Is Red the New Black?”), merchants need to rethink the bottom line for their entire operation and then determine the retail offering (stores, products, staffing, consumers, etc.)… Read more »
Kevin Graff
Guest
13 years 2 months ago

I hope the owners of the chain read the postings above and reconsider their strategy. If you can’t compete ‘full time’, you’re certainly not going to compete ‘part time’ in the minds of the customer.

The biggest challenge I would have to their argument for closing is that ‘every customer wants it on sale’. That’s fundamentally not true. Somehow there’s this thread of an idea that seems to be taking hold out there that the only thing that matters these days is price. Ridiculous! Sure, more customers are keeping on eye on prices. But, there are just as many customers out there who want a total shopping experience that extends well beyond just price.

Marc Gordon
Guest
Marc Gordon
13 years 2 months ago

Is this guy for real? When things get slow, why on earth would he want to make it more difficult for people to buy from him? The goal here to make your business as attractive as possible.

I think he needs to ask himself if people are not buying as much because of price, or because they are just not buying. If he were to stop discounting his products down so much, would sales volume really be impacted? He might be surprised to find out minor price increases have no real impact on sales if the quality and service remain high.

If this company competes just on price, I would say heavy discounts and less working days will be of no help in the long term.

I wish him luck, ’cause if his strategy fails, he’ll be closed 7 days a week.

Mike Osorio
Guest
Mike Osorio
13 years 2 months ago

Many retailers and shopping centers are cutting back on operating hours to remove operating costs from non peak hours. Kitchen Kaboodle is taking this to the next logical step–closing completely on unproductive days. The people who would normally shop on Monday through Wednesday will be inconvenienced, but their numbers were clearly not material to the business. It will also be easier to hire and retain a committed workforce who can have a clear work schedule and even have 3 days to consider a second part-time job if they choose.

Having given these positives, the strategy will only work for small chains – most landlords would not tolerate a closed storefront 3 days a week. The store competes more with higher end stores vs. Walmart so I’m not sure if “price” should be the foundation of their marketing. This type of product sells due to an inspiring environment and shopping experience. This will be interesting to watch.

Mark Lilien
Guest
13 years 2 months ago

All retailers should get together and demand the return of blue laws. In Bergen County, New Jersey, most retailing is banned on Sundays. No clothing. No electronics. No toys. No shoes. No furniture. No car dealers. Guess what? It’s a lot less stressful to run a store 6 days a week. And there’s no traffic on Sundays. Hobby Lobby and Chick-fil-A are both closed Sundays. So maybe, for someone, it’s OK to close Monday through Wednesday.

Jerry Gelsomino
Guest
13 years 2 months ago
Sounds like most of the folks above don’t like this idea much. I am sure the owners thought through their decision, surrounding themselves with supporters of the idea, rather than anyone here. I like those posts which stated that testing out concepts and radical ideas was pretty appropriate right now. For one thing, this idea has gotten Kitchen Kaboodle a lot of press, for a company that none of us have probably heard of before. I also began thinking about businesses that are closed certain days a week to be open when the customer for their services were more likely to walk in the shop. Barbers and hairdressers for one; closed on Monday, open on Saturdays. Banks used to be closed certain days, maybe some still are; once again to be opened weekend hours. What about all the street markets across the US which, particularly with this economy, are more popular than ever? They are open maybe two or three days a week, and when the customer is most likely to shop the market. Maybe… Read more »
Marge Laney
Guest
13 years 2 months ago

There appear to be at least six Walmart stores in the Portland Metro area that are open seven days, some 24 hours. I’ll bet most of what Kitchen Kaboodle offers can be found at Walmart for a pretty low if not the lowest price. Kitchen Kaboodle, like any boutique retailer, needs to differentiate itself on something other than price. I’m not sure limiting the number of days they are open should be one of them.

Steven Collinsworth
Guest
13 years 2 months ago

Bold move, yes. However, it seems to be based upon emotional sound bytes and snippets we are all bombarded with on a daily basis. Unless I read the article too quickly, which I have been known to do, I didn’t read about any analysis of his business overall.

Were consumers polled and their input considered? What is happening in his competitive marketplace? And finally, does he need to search inward to understand his offerings (assortment, promotions, and shelving) and his company’s value proposition to his consumers?

I agree with IMRetail and scanner. They are limiting themselves to connect with their consumer base and communicate their value proposition. Perhaps the biggest overall question to the retailer (actually to all retailers): what is your relevance in the consumer’s mind?

Valerie Bostic
Guest
Valerie Bostic
13 years 2 months ago

I’d like to thank every merchant who closes days or cuts hours for bringing me more retail business on my on-line eBay store which is open 24 hours, 7 days a week, and 365 days a year!

Brian Kelly
Guest
13 years 2 months ago

Kitchen Kaboodle could save more money if it closed every day. But then again, no one could buy anything. I commend flipping the model upside down, but it is all about the store. Unless of course Kitchen Kaboodle sells a unique assortment of merchandise that is only available at Kitchen Kaboodle. My hunch is kitchen gadgets are available just about everywhere. So if the store is not open, then nothing is sold, no customer is engaged and eventually shoppers go elsewhere.

As we say, retail ain’t for sissies.

Ted Hurlbut
Guest
Ted Hurlbut
13 years 2 months ago

Kitchen Kaboodle’s approach is understandable, but I think misguided. The consumer right now is very focused on price and promotions, but they also expect convenience. A strategy of competing on price by sacrificing customer convenience doesn’t make sense.

A successful strategy for a local retailer like this must focus on a value proposition built around something other than just price. I would expect that Kitchen Kaboodle will be rethinking their approach before too long.

Bob Phibbs
Guest
13 years 2 months ago

There’s bold steps and then silly ideas. This is one of them. The clue is, “… everybody wants everything on sale,…feel we need to get people what they want.” Why not just be on the web? Who goes shopping on odd days? You don’t train customers to shop when you find it convenient; close some stores and do a better job.

William Passodelis
Guest
13 years 2 months ago

A bewildering discussion (in the article) of a terrible idea. Everyone else has brought up great points and I generally agree with the other commentors.

This is not the answer. There ARE (many) answers but this is NOT it.

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