Tuesday, June 9, 2009

Focus On The Customer

As a follow-up to my post about How The Mighty Fall by Jim Collins, I thought I'd share a more personal story. How many of you remember a discount retailer called Bradlees? Operating stores from Maine to Virginia, Bradlees was the "Target of the northeast" in its day. With attractive stores and a solid reputation for its apparel, Bradlees leadership was convinced it had a winning formula.

In the mid 1980's, I worked in the public affairs department for The Stop & Shop Companies (Bradlees parent company at the time). Among other things, I was charged with helping the operating companies with store openings and new market entries, and writing all the speeches for the corporate CEO and the various company presidents. Interestingly enough, there was probably no one else at corporate who spent more time in stores talking to customers and front-line employees, while at the same time thinking and writing about the business on a macro scale. It's an experience that forever shaped how I approach my work. But I digress...back to the story.

I spent a great deal of time with Bradlees' senior leadership team, especially its president. As I remember it, Bradlees financial performance, regardless of how impressive, was always being compared to Wal-Mart and it really steamed the Bradlees leadership team. Gross margins was an especially sore subject, as Wall Street analysts kept asking why Bradlees couldn't achieve Wal-Mart's impressive results. The dilemma of course is how does one achieve Wal-Mart like margins when operating stores with expensive real estate and higher labor costs?

Tired of the monthly badgering about its margins, Bradlees leaders believed the quickest way to improve margins was to raise prices. And that's exactly what they did. The problem was, the customers responded by flocking to competitors Caldor, Zayre, and Ames. And for all intents and purposes, thousands of Bradlees customers simply left and never came back.

While Bradlees hung on for a number of years, it never fully recovered from the wound, going bankrupt in 2000 and closing all of its stores the following year. (Ironically, when Wal-Mart eventually opened stores in this part of the country it took over many of Bradlees former locations).

The poisonous combination of arrogance and lack of customer focus sent the company into a death spiral. Imagine going out of business because you tried to compete with another retailer that didn't have a store within 500-1000 miles of you? Hard to imagine, but that's what happened.

The next time you think about taking your focus off your customers, even for a second, remember Bradlees.


  1. You are right that paying attn to customers is job number 1. But you don't suggest what they should have done? Disregard Wall St.? Change locations? Lower margins? New model? Lots of companies have been put out of business by WalMart. More will be, too. Perhaps it's not too late to get them the answer.

  2. Great question Edward. As you know, many companies co-exist quite comfortably with Wal-Mart. Bradlees leadership should have acted like leaders - where you reframe the argument; you clearly articulate your vision and definition of success; and you continue to deliver for your customers and meet the expectations you share with the analysts.

    Bradlees leaders should have done what you preach so eloquently: tell Wall Street what the brand stands for and invite them to share in its beliefs.

    Ego got in the way on two fronts - one had to do with Wal-Mart and the other had to do with the belief that the customers wouldn't notice if they raised prices, and if they did, they'd stay loyal to Bradlees anyway. Unfortunately for Bradlees, they chose poorly!



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